L&T Finance Holdings Ltd.

Transformation in motion…

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:

After undergoing significant business restructuring in FY16, LTFH has made substantial progress in achieving scale in its focus business verticals. As a result, we expect return ratios (1.9% RoA and 17.2% RoE by FY19E) to show a marked improvement over the next two years. We expect LTFH to deliver a loan growth CAGR of ~15% over FY16-19E which coupled with higher operating efficiency and improvement in credit cost will help in delivering ~24% earnings CAGR for the consolidated entity. We initiate coverage on LTFH with a BUY rating and assign TP of Rs135 (P/ABV of 3.0x for FY19E) valuing it at a premium to its four-year mean (P/ABV of 2.2x for 1 year forward ABV).

Research Report – L&TFH

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