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L&T Finance Holdings Ltd. (L&THF) offers diverse range of financial
products and services across the corporate, retail and infrastructure finance
sectors, as well as mutual fund products and investment management
services, through direct and indirect wholly-owned subsidiaries. The
company has presence in 23 states in India.
Investment Rationale
Diversified and balanced mix of high growth businesses: The companies
diversified presence in various product line, catering to the needs of a
diverse customer base, from construction equipment hirers, truck owners,
farmers and shopkeepers and large infrastructure developers and
companies, including multi-national corporations.
Strong distribution network, with presence throughout India: Its
extensive network enables them to maintain and grow business, diversify
risk profile and service and support customers from proximate locations,
thus providing customers with convenient access to products and services.
High quality loan portfolio: For each of businesses, they have established a
strong credit check and asset valuation framework to evaluate and monitor
credit risk at the time of origination. The recovery process is tailored
specifically to each of lines of business and is not outsourced, which allow
them to directly control the slippages improving its asset quality.
Good financial and capital position, as well as access to multiple sources
of capital: CARE has assigned a ‘Grade 5’ to the L&T Finance Holdings Ltd
IPO which indicates ‘Strong Fundamentals’. L&TFH with CARE rating of
AA+ and an ICRA rating of LAA+. & status as a Public Financial Institution
(PFI) can access new sources of funds (such as insurance companies, public
trusts and pension funds) easily and at competitive rates going forward.
Concerns
It faces asset-liability mismatches which could expose it to interest rate and
liquidity risks.
Any changes in regulatory requirement for NBFCs by RBI may impact its
business.
Outlook & Valuation
In terms of valuation, the issue is offered at 2.4x and 2.1x its book value at
upper and lower price band respectively. Other stocks within the same
sector currently trades in the range of 2x-3x. The regulatory risks in the
sector and the other macro factors are concerns, but we believe with
diversified credit portfolio, better accounting norms L&T Finance can
weather these issues better than its peers. Considering promoter’s
leadership position in the market, visible brand, better operational
parameters & diversified credit portfolio, we expect L&TFH can command
higher premium going ahead. SUBSCIRBE
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L&T Finance Holdings Ltd. (L&THF) offers diverse range of financial
products and services across the corporate, retail and infrastructure finance
sectors, as well as mutual fund products and investment management
services, through direct and indirect wholly-owned subsidiaries. The
company has presence in 23 states in India.
Investment Rationale
Diversified and balanced mix of high growth businesses: The companies
diversified presence in various product line, catering to the needs of a
diverse customer base, from construction equipment hirers, truck owners,
farmers and shopkeepers and large infrastructure developers and
companies, including multi-national corporations.
Strong distribution network, with presence throughout India: Its
extensive network enables them to maintain and grow business, diversify
risk profile and service and support customers from proximate locations,
thus providing customers with convenient access to products and services.
High quality loan portfolio: For each of businesses, they have established a
strong credit check and asset valuation framework to evaluate and monitor
credit risk at the time of origination. The recovery process is tailored
specifically to each of lines of business and is not outsourced, which allow
them to directly control the slippages improving its asset quality.
Good financial and capital position, as well as access to multiple sources
of capital: CARE has assigned a ‘Grade 5’ to the L&T Finance Holdings Ltd
IPO which indicates ‘Strong Fundamentals’. L&TFH with CARE rating of
AA+ and an ICRA rating of LAA+. & status as a Public Financial Institution
(PFI) can access new sources of funds (such as insurance companies, public
trusts and pension funds) easily and at competitive rates going forward.
Concerns
It faces asset-liability mismatches which could expose it to interest rate and
liquidity risks.
Any changes in regulatory requirement for NBFCs by RBI may impact its
business.
Outlook & Valuation
In terms of valuation, the issue is offered at 2.4x and 2.1x its book value at
upper and lower price band respectively. Other stocks within the same
sector currently trades in the range of 2x-3x. The regulatory risks in the
sector and the other macro factors are concerns, but we believe with
diversified credit portfolio, better accounting norms L&T Finance can
weather these issues better than its peers. Considering promoter’s
leadership position in the market, visible brand, better operational
parameters & diversified credit portfolio, we expect L&TFH can command
higher premium going ahead. SUBSCIRBE
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