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L&T Finance (LTFH) reported Q2FY15 results which were ahead of expectation
with Consolidated Net interest income increase of 45% yoy to Rs 6.7 bn (vs
expectation of Rs 5.6 bn) driven by 1) higher NIMs due to one off income from
recoveries in NPAs and higher prepayments and 2) consolidated loan growth was
higher at 21% yoy (5% qoq). Management has not provided an amount of one off
income in interest income, however management specified that NIMs were higher
by 40-50 bps due to one off. Our back of the envelop calculation indicates that it
would have been to the extent of ~Rs 500 mn. Adjusted for same, NII would have
been at Rs 6.2 bn, higher by 11% from our expectation. Company has used this
one off income for increasing the provision coverage as conservatism. As a result
Net profit was slightly lower than expectation at Rs 1.8 bn. Valuations remain
reasonable at 1.5x, maintain buy with target price of Rs 80, valuing at 2x FY16E
consolidated ABV.
Result highlights
Loan growth largely driven by infra financing and Housing finance
business:
LTFH’s loan book was strong at 21% yoy led by strong growth in housing finance
business (recently acquired) which grew by 213% yoy (17% qoq) to Rs 24.6 bn and
Infra financing business which grew by 24% yoy to Rs 197 bn while L&T Finance
(which includes all retail business) grew by 10% yoy (stable qoq) to Rs 206.4 bn.
Proportion of housing finance business has increased to 5.8% vs 5.2% in Q1FY15
and 2.2% in Q2FY14. Disbursements growth was at 39% yoy to Rs 76.9 bn backed
by L&T infra disbursement increase of 122% yoy and housing finance business growth
of 66% yoy.
LINK
http://www.indianivesh.in/Admin/Upload/635499967665711250_L_T%20Finance%20Holding_Q2FY15%20Result%20Update.pdf
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