L&T Finance

The company has posted a set of good numbers for Q4FY13. Consolidated Income from operations for the quarter was at Rs.1132 crore v/s Rs. 854 crore, up 32% (YoY). Net profit was at Rs.171 crore v/s Rs.141 crore (YoY), up 24%. Net interest income (NII) was up 27% at Rs.478 crore. There has been an improvement in asset quality too with Gross NPA at 2.3% v/s 2.39% and net NPA at 1.26% v/s 1.56% (QoQ).  The company has ended FY13 on a very bright note, reporting a consolidated net profit at Rs. 730 crore, up 61% on a total income of Rs.4006 crore, up 33%.

Advances were up 30% at over Rs.33, 000 and up 7% sequentially. Lending to infra made up for the major chunk of its lending, up 35% at Rs.15,000 crore but the biggest lending was to the retail and corporate finance, which at Rs.18,200 crore, was up 23%. The recent new line of credit, Housing Finance is still in its nascent stages and it made a humble beginning with a loan book size of Rs.326 crore. The company also recently started wealth management and is already managing around Rs.2000 crore. The company is now foraying into insurance in a big way as it is all set to buy a 50% stake in Future group’s Future Generali  for around Rs.600 crore. The company is being looked on a strong contender for getting the banking license as it does not strings tied to any ‘family’ as such. Its parentage is L&T, which holds 82.57 per cent in L&T Finance which in turn is held mainly by institutions like LIC, SUUTI, and L&T Employees Welfare Foundation. A banking licence will indeed turnaround the entire picture for the company from being a merely well respected NBFC to a well respected bank. That licence in many ways will be the next big trigger for this stock.