Operating in engineering, manufacturing, construction, information technology, financial services, and technology, Larsen & Toubro Ltd or L&T, is an Indian multinational conglomerate with headquarters in Mumbai. The business ranks among the top construction firms worldwide. Henning Holck-Larsen and Soren Kristian Toubro, two Danish engineers formed it.
About 118 subsidiaries, six associates, 25 joint ventures, and 35 joint operations firms make up the L&T Group as of 2020. These businesses work in primary and heavy engineering, construction, real estate, capital goods manufacture, information technology, and financial services.
Most of the infrastructure giant Larsen & Toubro’s subsidiaries have successfully provided returns to their owners. L&T Finance Holdings, the company’s financial services division, has laggedthe other branches. Is there any factor preventing the L&T Finance share price from rising, or is it the high exposure to the infrastructure and real estate sectors?
L&T Quarterly Results
- Transforming to a fintech scale organization that is “customer pleasant.”
- Making steady progress toward Lakshya 2026, Q1FY23 PAT increased by 47% YoY, PBT increased by 50% YoY, and PAT increased by 47% YoY.
- Fintech at scale is driving the realisation process forward more quickly: maintaining a strong business momentum supported by digitisation, data exploitation, and fundamental business capabilities.
- About Rs. 8,938 crore, up 10% QoQ and 148% YoY, represents the highest-ever quarterly retail disbursements. A strong trend for payments surpassing Q4FY22
- According to the Lakshya 2026 strategy plan, the retail portfolio mix is now 54% (up from 45% in Q1FY22), and the retail book has increased by 6% QoQ and 19% YoY.
- Rhythmic normalised collections with a strong performance in all businesses
- Using digital technologies and fresh products to boost growth in the future: expansion of end-to-end digital products Consumer loan payments of Rs. 1,010 crore, up 26% quarterly; SME Loans are increasing steadily; a pilot program was started in the third quarter of the fiscal year 2022. As of the first quarter of the fiscal year 2023, the book size would be Rs. 126 crore.
L&T Finance cannot duplicate the success of LTTS and LTI. LTFH has been unable to produce money for its shareholders and itself. LTFH’s revenue has increased at a CAGR of just 7% over the last five years. Through time, its profit has remained unchanged. The stock produced a CAGR of -9% in the previous five years.
The IL&FS crisis affected the net interest margin, a proxy for estimating the profitability of finance companies. The ratio of cost to income, which illustrates how much operating expense must be incurred to generate operating income, was likewise greater than average.
The L&T Finance share price profitability has varied throughout the past four to five years due to the cyclical nature of the real estate market and several significant events. As a result of the sharp decline in mortgage interest rates brought on by the low-interest rate environment experienced globally, housing markets are experiencing an upsurge in demand.
Owners of LTFH who have held shares for a long time may benefit from an increase in profitability if the real estate market recovers.