L&T Finance Q1 Review - Growth, Quality Both Prove A Drag: Prabhudas Lilladher
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Prabhudas Lilladher Report
Q1 FY22 earnings for L&T Finance Holdings Ltd. nosedived (33%QoQ) to Rs 1.77 billion with a huge miss on estimates (our estimate: Rs 3.5 billion) (profit before tax down ~300%) primarily on account of elevated provisioning (up 57%QoQ).
As highlighted in Q4 FY21 update, Covid 2.0 engulfs hinterlands impacting L&T Finance’s rural portfolio and gross non performing assets spike 75 basis points to 5.75% with credit costs jumping 150bps QoQ.
Infra (8% non performing asset) followed by rural portfolio (4.4% NPA) witnessed steep asset quality deterioration.
And rural profitability metrics crippled (disbursements halve, credit costs spike 161bps to 7%, return on assets dip 130bps to 1.3% QoQ) in Q1 FY22.
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