L&T Finance (LTF) Q3 24/25 earnings summary

Executive summary

• Retailisation reached 97% of the overall book, with the retail book at ₹92,224 crore, up 23% year-on-year, and consolidated book at ₹95,120 crore, up 16% year-on-year.

• Retail disbursements grew 5% year-on-year to ₹15,210 crore, led by Farmer Finance (+23% YoY) and Home Loans & LAP (+24% YoY), while Rural Business Finance disbursements declined 16% YoY due to a risk-calibrated approach.

• Consolidated profit after tax for Q3 FY25 was ₹626 crore, and for the nine months ended December 31, 2024, it was ₹2,007.58 crore.

• Strategic initiatives included the rollout of Project Cyclops (AI-driven underwriting), partnerships with Amazon Pay and PhonePe, and the launch of an AI-based customer chatbot.

• Utilized ₹100 crore of macro-prudential provisions to manage elevated credit costs in Rural Group Loans & Microfinance, with further utilization expected in Q4.

Financial highlights

• NIM plus fees for Q3 FY25 were 10.33%, down from 10.86% in Q2 FY25, reflecting a change in book mix.

• Consolidated ROA at 2.27%, down 26 bps year-on-year; ROE at 10.21%, down 1.14% year-on-year.

• Credit cost for Q3 FY25 was 2.49% (2.91% excluding macro-provision utilization), down from 2.59% in Q2 FY25.

• Operating expenses increased 18% year-on-year, while total income grew 11% year-on-year.

• Debt-equity ratio stood at 3.46 (consolidated), and consolidated CRAR was 22.48%.

Outlook and guidance

• Management anticipates improving collection efficiency and early recovery trends in Rural Group Loans & Microfinance as macro headwinds abate.

• Macro-prudential provision utilization in Q4 is estimated at ₹300–350 crore.

• Targeting ROA of 2.8%-3% over the medium term, though near-term challenges may delay this by a few quarters.

• Focus remains on sustaining retailisation above 95% and maintaining asset quality in line with Lakshya 2026 goals.

• Retail loan growth guided by risk-reward, with caution prioritized over aggressive expansion.