On January 21, 2025, shares of L&T Finance Holdings experienced a sharp decline of 3%, closing at ₹140.40 after the company reported a 2% year-on-year (YoY) drop in its profit after tax (PAT) for the third quarter of fiscal year 2025. The net profit for the quarter stood at ₹626.4 crore, down from ₹640 crore during the same period last year.
L&T Finance Corporation’s shares dipped 3% to an intraday low of Rs 140.40 on Tuesday as PAT in Q3 down 2% YoY to Rs 626 crore; Rs 640 crore PAT in Q3 of 2017-18. However, its retail book, a key measure of the health of a car loan portfolio, rose 23% year on year (YoY) to Rs 92,224 crore.
However, for the nine months ended December 2021, LTF posted a consolidated PAT of Rs 2,007 crore, up by 14% from 9MFY24.
Concerning the Total Operative Income, fees and Other Income of L&T Finance came at 10.33% for the third quarter of FY ’24, which decreased to 10.93% for the same period of the last fiscal.
On a segment-wise basis, with the highest YoY growth of 41%, the book size of housing loans and LAP has risen from Rs 16,654 crore to Rs 23,461 crore.
Rural Business finance increased to Rs 26,231 crore as compared to the previous Rs 23,110 crore YoY, and farmer finance at a book size of Rs 15,075 crore as compared to Rs 13,810 crore YoY.
However, the size of the two-wheeler financing portfolio expanded by 21% YoY at Rs 12 676 crore, affected from Rs 10 447 crore in the previous year, and the personal loan sector reached Rs 7 820 crore at the end of the year by 22% YoY.
The consolidated asset quality of the company was also quite healthy in the current quarter; the gross stage 3 (GS3) ratio was 3.23% in Q3FY25 and 3.21% in Q3FY24.
The NS3 ratio was 0.97 percent in the third quarter of the financial year 2022-25, up from 0.81 percent in Q3FY24.
Market Reaction And Future Outlook
The immediate market reaction to L&T Finance’s Q3 results reflects a cautious sentiment among investors. Over the past year, L&T Finance shares have fallen by approximately 15.5%, with significant declines over both six-month and three-month periods as well.
However, it is worth noting that the stock had seen a slight recovery of about 3.6% over the past month prior to this latest downturn.
Market analysts are closely monitoring how L&T Finance will navigate future challenges, particularly concerning its net interest margin (NIM), which decreased by 60 basis points YoY to 10.33%. The reduction in NIM could impact profitability moving forward and is a key metric for investors assessing the company’s financial health.