Strong growth momentum to sustain…
L&T Finance Holdings Ltd. (LTFH) is a financial holding company offering a diverse range of financial products and services across retail, corporate, housing and infrastructure finance sectors. It also has presence in asset management and investment management services.
Valuation: The company reported steady performance across business segments in Q1FY18. Notably, LTFH has shown commendable progress on its well-articulated strategy since FY17. We believe that it is well on track to achieve top quartile RoE (16% by FY19E). Although the stock has seen strong runup in the last one year, the market will continue to rerate it further given the company’s focus on strengthening the balance sheet and improving operating efficiency along with rundown of non-core segments. Hence, we continue to maintain BUY rating on the stock with a target price (TP) of Rs200 valuing it using SOTP methodology. The valuation corresponds to P/ABV of 4.0x for FY19E for consolidated entity.
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