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Target: ₹88
CMP: ₹81.1
LT Finance Holding’s Q4-FY22 earnings (PAT at ₹340 crore) stood above our estimates of ₹330 crore) on account of lower provisions. Loan traction showed good sequential growth at ₹88,340 crore (PLe: ₹90,400 crore) with book growing 3.3 per cent q-o-q, yet declining 6 per cent y-o-y.
Disbursements strongly grew at 48 per cent q-o-q/82 per cent y-o-y to ₹14,730 crore led by consumer, micro and housing loans. Asset quality improved across segments due to on ground collection efforts.
Overall GS3 (gross stage) reduced to 3.80 per cent in Q4 v/s 5.91 per cent in Q3. Also NS3 (net stage) came in at 2.0 per cent with 48 per cent PCR. In order to counter impact any future Covid waves, management kept additional provisions of ₹1,720 crore (2.10 per cent of standard assets) to be gradually released in coming quarters.
We reckon LTFH valuations will improve when proportion of retail loans continue to go up, plus use of digital and data analytics increases. Against this backdrop, we maintain our price target at ₹88.
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