L&T Finance hits new high after over 7 years; should you buy, hold or sell?

Business Standard

2 days ago

L&T Finance share price today
Shares of L&T Finance (LTF) hit an all-time high of ₹214.80, up 2 per cent on the BSE in Wednesday's intra-day trade. The stock price of this non-banking finance company (NBFC) surpassed its previous high of ₹213.60 touched on October 24, 2017, the BSE data shows.
In the past five months, LTF has zoomed 60 per cent. While, thus far in the calendar year, the stock has outperformed the market by surging 56 per cent, as compared to 5 per cent rise in the BSE Sensex.
L&T Finance - Q1FY26 performance
LTF reported a steady performance in the April to June 2025 quarter (Q1FY26) with visible recovery in rural portfolios. Retail disbursements stood at ₹17,522 crore (up 18 per cent YoY, 18 per cent QoQ), primarily led by integration of recently acquired gold loan portfolios. Retail book expanded 18 per cent YoY to ₹99,816 crore, while consolidated asset under management (AUM) increased 15 per cent YoY to ₹1.02 trillion. Asset quality metrics were stable with gross net performing asset (GNPA) at 2.93 per cent and net NPA at 0.83 per cent.
Brokerages view, rating and target price for LTF
According to analysts at ICICI Securities, relative resilience, amid volatility in the microfinance institution (MFI) segment, bodes well. Alteration in business mix, amid focus on sustainable and risk calibrated growth is expected to keep business growth steady and improve sustainability of performance. The brokerage firm revised target price to ₹250, valuing the stock at ~2x FY27E BV. Upgrade the stock from Hold to Buy.
JM Financial Institutional Equities, Edelweiss Securities and Mirae Asset Sharekhan also have a 'Buy' rating on LTF with a target price of ₹240 per share.
Current quarterly performance has been steady with moderating credit cost and improved growth visibility given its partnerships with Amazon and Phonepe. Its project Cyclops also offers significant support to the business in terms of underwriting, analysts at JM Financial Institutional Equities said.
With a revival in growth and improving MFI outlook, we retain 'BUY'. Investment in a formidable digital platform shall ensure an accelerated shift to prime customers, which will help improve risk-adjusted yield by 50-100bp. LTF could dip into its remaining buffer of ₹ 275 crore even in Q2FY26. Credit Enhancement in MFI, especially Karnataka, will normalise by September/October, according to analysts at Edelweiss Securities.
Stress in the unsecured segment is a near-term headwind, which the company will navigate and come out stronger. The company has already provided for most of the stress book through a combination of credit costs and excess balance sheet provisions. It remains assertive on reduction in credit costs and improvement in asset quality in the MFI space from H2FY26, said Mirae Asset Sharekhan in Q1 result update.
Meanwhile, S&P Global Ratings expects L&T Finance's risk profile to improve, as the company shifts toward more diversified retail lending. Economic growth will also aid recovery of legacy wholesale and security receipt exposures.
'In our base case, L&T Finance will have strong retail loan growth of about 35 per cent for fiscal 2026 and 15 per cent for fiscal years 2027 and 2028. The company will also continue to shrink its wholesale loans. In addition, we expect yields to moderately decline over the forecast horizon as the company increases its secured lending portfolio,' the rating agency said in rationale.
India's robust medium-term growth potential and large, diversified economy should continue to support NBFCs' business prospects and profitability in the medium term. Easing domestic interest rates, moderate inflation and improved system liquidity should buffer against global economic uncertainty, particularly as India's NBFCs are mostly domestically focused, said Fitch Ratings.