L&T Finance Holdings Q3 profit jumps 16.7 per cent, stock goes northwards

L&T Finance Holdings rose by 4 per cent on BSE after posting 16.7 per cent growth in the third quarter.

The company’s consolidated net profit rose by 16.7 per cent to 211.96 crore during the third quarter ended September 2015, against  Rs 181.61 crore in the corresponding period of last year.

Profitability was supported by consistent and steady improvement in key operating parameters like healthy margins; steady fee income; and stable opex. The asset management business continues to contribute positively, the company said in a BSE filing.

Total income increased by 15.76 per cent to Rs 1,819.81 crore, driven by a healthy 23 per cent growth in loans and advances, during the quarter under review, from Rs 1,571.99 crore earned in the same period a year ago, the company said in a BSE filing.

Company's loans and advances as on December 31, 2015, grew by 23 per cent to Rs 55,694 crore compared with Rs 45,225 crore a year ago. The growth has been led by a healthy disbursement growth of 40 per cent in the key focus areas i.e. operational projects in renewable energy and roads; retail B2C products – housing, microfinance and two wheelers.

The company is confident of maintaining this trend of consistent growth in assets and profitability on the basis of lending opportunities, around focus areas of B2C products in the retail business and operational assets in wholesale business.

Net Interest Income, the difference between interest earned and interest expended, grew by 20 per cent to Rs 750 crore from Rs 623 crore during same period. Net Interest Margin (NIM) stands at 5.63 per cent in Q3FY16 compared to 5.66 per cent in same period last year.

Asset quality has declined on sequential basis during the quarter on account of the stress in rural markets. Gross Non-Performing Assets (NPAs) rose(down 115 basis points year-on-year) to 3.33 per cent from 3.08 per cent on sequential basis. Net NPA also increased at 2.23 per cent Q-O-Q but declined 119 basis points on yearly basis. On a Y-O-Y basis gross NPA showed a depreciating trend despite above normal delinquencies in Farm portfolio indicating that NPAs in other businesses have been contained.

Currently stock is trading 3.54 per cent up, at Rs 58.35 per cent. We are still bullish on this counter and recommend to hold your position.