Target: ₹190

CMP: ₹166

Subsequent to discontinuing its painful “focused-defocused segments” strategy, L&T Finance Holdings is on the brink of completing the successful execution of its ‘Lakshya 2026’ led retailisation plan. Now, its retail assets comprising of over 90 per cent of the loan book, its sustainable moats in Rural, 2W and Farm Equipment segments, and a strong balance sheet with material macro-prudential provisions and a prudent asset valuations buffer give enough comfort on sustained profitable growth.

Against this backdrop, Sudipta Roy — a seasoned retail lending professional with a strong tech & analytics bent — taking over as CEO shores up LTFH’s endeavor towards achieving consolidated RoA of 3 per cent in FY26 and beyond, with the established retail business firing on all cylinders and given some optionality from company’s entry into adjacencies such as cards, micro-LAP, and gold loans.

We revise our estimates to factor in the accelerated rundown of the wholesale book and further realisation of SR receivables in FY25 and FY26 leading to reduced investments in the book.

We marginally tweak our FY24-26 estimates and upgrade the stock to Buy from Reduce, with revised Dec-24E TP of ₹190/sh (up from the earlier Sep-24E TP of ₹155), implying FY25E P/B of 1.8x.