Latest News | L&T Finance Net Profit Jumps 52 Pc in Sept Quarter

New Delhi, Oct 22 (PTI) L&T Finance Holdings on Thursday reported a 52 per cent jump in consolidated net profit at Rs 265 crore in the September 2020 quarter, boosted by a strong demand revival in rural and renewable energy sectors, despite a fall in revenue.

The company had posted a net profit of Rs 174 crore in the corresponding quarter of 2019-20.

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Total income fell to Rs 3,508.91 crore in the reporting quarter from Rs 3,711.85 crore a year ago, pulling down interest income marginally to Rs 3,281.56 crore from Rs 3,294.38 crore, the company said in a statement.

The company has made an additional pandemic provision of Rs 512 crore in the quarter for further strengthening the balance sheet and increasing its provision coverage ratio to 69 from 54 a year ago. Had it not been for this steep provision, the profit would have been much bigger.

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With this additional provision, the company carries Rs 1,757 crore of provisions on account of macro prudential provisions, special pandemic provisions and accelerated expected credit losses provisions.

These additional provisions translate to 1.95 per cent of the standard book and of the total provisions, Rs 1,079 crore are towards micro loan book (9.2 per cent of standard micro loan book), the company said.

The asset quality has improved during the quarter with the gross NPA ratio improving from 5.98 to 5.19 on an annualised basis, while the net NPA ratio come down from 2.83 to 1.67 year-on-year.

From an asset growth perspective, rural clipped at 7 per cent to Rs 28,371 crore, boosted by a full 19 per cent growth in farm equipment finance, and 12 per cent rise in two-wheeler loans while the home loan book clipped at 11 per cent to Rs 27,241 crore. Its total asset stood at Rs 98,823 crore.

The non-banking financial company (NBFC) saw strong revival in rural and renewable demand, helping it gain market share to become the number one farm equipment financier during second quarter of this fiscal.

There is a significant business momentum in farm equipment and infra finance where it is the market leader coupled with two-wheeler and renewable sector finance as well as moderate pick-up of disbursements in the micro and home loans, it said.

"As anticipated, the second quarter saw a revival in the rural economy, which will also drive the overall economic growth for the next few quarters," L&T Finance Holdings Managing Director and Chief Executive Officer Dinanath Dubhashi said.

He added that the company's rural business saw significant growth momentum backed by its market leading position and strong digital and data analytics infrastructure. Performance was also boosted by excellent pick-up in disbursements in our renewable energy portfolio, Dubhashi added.

With ample liquidity position of Rs 17,449 crore as of September-end, the company said it will focus on reducing excess liquidity and cost of borrowing. That apart, the company has liquid assets of Rs 8,660 crore and undrawn bank lines of Rs 6,789 crore and a Rs 2,000-crore back-up line from L&T.

Its flagship farm equipment finance saw disbursements jumping a whopping 59 per cent, while two-wheeler finance witnessed increased momentum helping it become one of the top-three financiers in August and September.

Microfinance portfolio saw substantial ramp-up in disbursements on the back of improved collection efficiency and infrastructure loans saw strong pick-up in disbursements, especially in renewables, with the highest-ever quarterly sell down of Rs 4,073 crore.

"Our continued focus on projects with strong sponsors and off-takers with proven track record have helped us maintain market leadership position in identified sectors," Dubhashi said.

The company's shares on Thursday closed at Rs 64.35 on the BSE, up 1.98 per cent from the previous close.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)