L&T Finance Holdings conducted a conference call on 29 April 2024 to discuss its financial results for the quarter ended March 2024. Sudipta Roy, MD&CEO of the company addressed the call:

Highlights:

The company has achieved record high net profit of Rs 2320 crore in FY2024.

The company has a continued strong disbursements momentum recording 33% yoy and 4% qoq growth in disbursements to record high of Rs 15044 crore in Q4FY2024.

The company has achieved record high disbursements of Rs 54267 crore, up 29% in FY2024.

The aim of the company is to make retail disbursements sustainable and predictable.

Retail loan Book has jumped 31% yoy to Rs 80037 crore end March 2024.

Having achieved Lakshya 2026 goals at Retail level in Q3FY24, the company now has reoriented to convergence at consolidated level by FY26.

The company aims to improve reutilization to 95% by FY2026 from existing 94%.

The company aims to maintain the retail loan growth at above 20% for next two years as against 31% in FY2024.

The company aims to achieve consolidated GNPA below 3% and NNPA ratio below 1%, as against current retail GNPA of 3.15% and NNPA of 0.79%.

The company aims to achieve consolidated RoA of 2.8-3% as against current RoA of 2.19% in Q4FY24 and 2.32% in FY2024.

Excluding the prudential contingency provisions the RoA of the company was higher at 2.6% for Q4 and 2.43% for FY2024.

Excluding the prudential provisions, the profit has increased by 50% to Rs 2432 crore in FY2024.

The company is focusing on five pillar strategy to achive Lakshya 2026 goals. These are enhanced customer acquisition, sharpening credit underwriting, implementing futuristic digital architecture, heightened brand visibility and capacity building.

The company has a substantially reduced its wholesale loan book from Rs 38058 crore end September 2022 to Rs 5528 crore end March 2024. The share of wholesale loan book has dipped from 42% end September 2022 to 6% end March 2024.

The wholesale loan book has declined to Rs 4400 crore on account of prepayments and repayments after March 2024.

The company has conducted fair valuation exercise of wholesale loan book of Rs 1821 crore, which has led to release of Rs 546 crore of provisions. The company has utilized these provisions for creating additional provisions of Rs 721 crore in Q4FY2024 on securities receipt (SR) book including Rs 175 crore of provision created through P&L.

The company has created overall provisions of Rs 8300 crore on SR book. Thus, the provision coverage on SR book has increased to 55%. The net SR book stands at Rs 7500 crore, which mostly relates to real estate and infrastructure. With the boom in the real estate sector, the company sees resolution of some of the SR book. Overall, the company expects the recoveries the SR book to be surplus.

With the wholesale loan book reducing to the marginal level of 6%, the company aims to focus on the growth of the retail loan book and engage with the ARCs for resolution of SRs.

The company is focusing on maintaining its credit cost on downward trajectory. The credit cost is expected to be in the range of 2.2-2.5%. The normal monsoon will aid in improvement of the credit matrix.

The company had created covid provisions of Rs 1200 crore which remains on the book unutilized.

The company has raised provision coverage ratio to healthy level of 77% from 69% last year.