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L&T Finance Q4 Review - Asset Quality Vulnerability Increases: Prabhudas Lilladher

L&T Finance Q4 Review - Asset Quality Vulnerability Increases: Prabhudas Lilladher

An official shows new currency notes of Rs 500 at State Bank of India head office in New Delhi. (Source: PTI)
An official shows new currency notes of Rs 500 at State Bank of India head office in New Delhi. (Source: PTI)

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

Prabhudas Lilladher Report

Q4 FY21 earnings stood stable for L&T Finance Holdings Ltd. owing to robust disbursals in key businesses (micro/consumer/home loans) aiding fees and steady asset quality (5% gross non-performing asset versus 5.3%: Q3).

However, as second wave engulfs hinterlands, we foresee increased vulnerability for the company's business led by-

1. concentrated exposures of rapidly expanding two-wheeler/micro/consumer loans in states full of uncertainties (elections, higher Covid-19 cases, partial lockdowns)

2. continued higher write-offs (Rs 7 billion for Q4 FY21, Rs 19 billion for FY21 largely led by rural business) partially aiding asset quality improvement

3. 6% provisions on micro loans although down from 10% (Q3 FY21) stand higher than industry run-rate.

Click on the attachment to read the full report:

Prabhudas Lilladher L&T Finance Holding Q4FY21 Result Update.pdf

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