INSUBCONTINENT EXCLUSIVE:
Authors: JordanET Intelligence Group: After hitting a low of Rs 153.5 on March 20, the stock of LT Finance Holdings has since gained 12 per
On Friday, it further gained 2.7 per cent after the company reported stellar numbers for the March quarter and for FY18
lucrative verticals including rural, housing and select wholesale financing is paying off.
Two years ago, the company was saddled with
non-performing assets from lending segments including construction equipment, gold loans, commercial vehicles, and leasing activities
In FY18, exposure to this defocussed book was reduced to Rs 1,540 crore compared with Rs 4,931 crore in FY16.
During the period, the focused
loan book expanded to Rs 82,114 crore rom Rs 53,290 crore.
The exercise has helped in improving the asset quality
At the end of March 2018, the gross non-performing assets as a percentage of total advances (GNPA ratio) reduced to 4.8 per cent from 7.1
The net NPA ratio dropped to 2.3 per cent from 5 per cent during the period
The company is also keen to increase the provisioning for bad loans
In the March quarter, it increased it to 52.5 per cent of total bad loans from 31 per cent a year ago and from 15 per cent two years
ago.
Apart from improving the efficiency of its lending activity, the company has also focused on fee income as a measure to support
overall performance for FY18
Income from operations increased by 20 per cent year-on-year to Rs 10,021 crore while net profit grew by 40 per cent to Rs 1,459 crore
The return on equity (RoE) improved by 272 basis points to 15 per cent after considering the capital infusion of Rs 3,000 crore in March
price-book (P/B) multiple of 2.6
This is lower than the P/B of 3-5 for some of the other NBFCs
