L&T Finance Holdings Ltd. announces financial results for Q2FY21

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Mumbai: The Board of L&T Finance Holdings (LTFH), a well-diversified Non-Banking Financial Company (NBFC), present in key lending businesses such as Rural, Housing, and Infrastructure finance, today announced the financial results for the quarter ended September 30, 2020.

LTFH is a market leader in Farm Equipment finance and Infrastructure finance, with a dominant position in Two-Wheeler finance and Micro Loans. With a robust business model, data analytics led collection and disbursement prioritization, and a sharp focus on asset quality, the company remains committed to building a stable and sustainable organization for its consumers and other stakeholders.

Commenting on the financial results Mr. Dinanath Dubhashi, Managing Director & CEO, LTFH, said, “As anticipated, Q2 saw a revival in the rural economy, which we believe will also drive the economic growth of the country for the next few quarters. In Q2, our Rural business witnessed significant growth momentum backed by our market-leading position and strong digital and data analytics infrastructure for the lending business. The performance was also boosted by an excellent pick up in disbursements in our renewable energy portfolio.

Furthermore, with the incremental macro-prudential provisions made in the quarter, we have well provided for the balance sheet. AAA-rated NBFCs like LTFH are seeing a gradual easing out of liquidity conditions and our focus now would be to reduce excess liquidity and bring down the cost of borrowing.”

Key Highlights of Q2FY21:

The quarter saw a significant up-take in rural and infrastructure finance, led by a revival in the economy, leading to significant MoM improvement in collections. LTFH took full advantage of the faster than expected recovery in the Rural and Infrastructure segments and is well-positioned for the upcoming festive season.

A.    Disbursements: The company witnessed an excellent pick-up in disbursements across the various retail businesses and Infrastructure finance.

·Rural Finance: witnessed steady MoM improvements in disbursements with the highest ever ‘September’ disbursement.

a)     Farm Equipment Finance: focus on new tractor business and increased refinance helped us gain market share to become No.1 Farm Equipment financer for Q2FY21; 59% YoY increase in disbursements

b)    Two-wheeler Finance: witnessed increased momentum; among top 3 financiers in August & September

c)     Micro Loans: substantially ramped up disbursements on the back of improved collection efficiency MoM, with additional provisions to address any moratorium related risk

·Housing Finance:

a)     Witnessed moderate pick-up in Home Loan & Loan Against Property (LAP), led by slower pick up in Industry fundamentals. 87% of Home Loans disbursed were to the salaried segment. Furthermore, salaried home loan disbursements reached 88% in September 2020 vs September 2019

b)    No new real estate projects were sanctioned, and we continued to support developers in fast-tracking existing construction progress leading to improved collections and sales as the economy gradually opened up

·Infrastructure Finance: strong pick up in disbursements, especially in renewables, with the highest ever quarterly sell down of Rs. 4,073 Cr. Our continued focus on projects with strong sponsors and off-takers with proven track record helped us maintain the market leadership positions in identified sectors.

B.    Liquidity: With the availability of ample liquidity in the system for AAA-rated NBFCs with good parentage, LTFH’s focus will be on reducing excess liquidity and the cost of borrowing.

As of September 2020, we maintained Rs. 17,449 Cr of liquidity through the following:

a.     Liquid Assets in the form of cash, FDs, and other liquid investments of Rs. 8,660 Cr

b.    Undrawn bank lines of Rs. 6,789 Cr and back up the line from L&T of Rs. 2,000 Cr

c.    Received the first tranche of $50 million of the total $100 million ECB loan from Asian Infrastructure Investment Bank (AIIB); AIIB’s first loan to a non-banking financial company (NBFC) in India

With the easing of market condition, our focus now would be to reduce excess liquidity and bring down the cost of borrowing 

C.    Highest Credit Ratings: A diversified business presence, improving asset quality, prudent ALM, and strategic importance to the parent L&T has led to LTFH’s AAA rating being reaffirmed.

·CRISIL assigned in October 2019 and reaffirmed in May 2020

·India Ratings reaffirmed in September 2019 and April 2020

·ICRA reaffirmed in August 2019 and September 2020

·CARE reaffirmed in August 2019 and October 2020 

D.    Balance Sheet: The focus on further strengthening the balance sheet remains even though there is a strong on-ground recovery in the rural economy. LTFH continues to maintain strong capital adequacy of 21.37%.

The Gross Stage 3 assets of the company stood at 5.19% of its book, showing a reduction of 79bps YoY. The company also strengthened the PCR on stage 3 assets from 54% in Q2FY20 to 69% in Q2FY21.





Gross Stage 3




Net Stage 3




Gross Stage 3%




Net Stage 3%




Provision Coverage %














As a prudent measure, we have made additional provisions of Rs. 512 Cr in Q2FY21 to strengthen the balance sheet, even though there is strong on-ground recovery. LTFH, resultantly, carries Rs. 1,757 Cr of provisions on account of macro-prudential provisions, COVID-19 and accelerated Expected Credit Losses (ECL) provisions on stage 1 & 2 assets, which are over and above the ECL model on GS3 and Stage 1 & 2 assets. The additional provisions of Rs. 1, 757 Cr translate to 1.95% of the standard book. Out of this, Rs 1,079 Cr of provisions are towards Micro Loan book (9.2% of standard Micro Loan book). Moratorium related risks have been largely addressed through these additional provisioning.

E.    Focused Lending Book: The focused lending book improved marginally, owing to the increase in disbursements in the quarter.  Within the focused lending book, the Rural Finance book grew by 7% YoY, suitably aided by growth in Farm Equipment Finance book by 19% and the Two-Wheeler Finance book by 12%. The Home Loan book grew by 11%, YoY.

(Rs. Cr)



Book Growth (%)

Focused Lending Businesses

Rural Finance




Housing Finance




Infrastructure Finance




Total Focused Book




Defocused Businesses




Total Lending Book

1,00, 258



The Average Assets under Management (AAUM) of the Investment Management business stood at Rs.63,057 Cr in Q2FY21. The AUM for Equity and High-Quality Fixed income asset classes as of 30th September 2020 stood at Rs. 35,635 Cr and Rs.13,783 Cr, with a growth of 7% and 11% respectively on QoQ basis.

Financial Performance:

LTFH is focused on leveraging the power of data and analytics to build a ‘collection led disbursement’ model, which along with economic recovery in the rural segment has led to a significant improvement in collection efficiency.

·The company posted a consolidated PAT of Rs. 265 Cr in Q2FY21, a 52% increase YoY, up from Rs. 174 Cr in Q2FY20*

·PAT in Q2FY21 saw a 79% increase over Q1FY21, which stood at Rs. 148 Cr.

·NIMs+Fees at 6.49% (Q2FY21) vs 6.86% (Q2FY20). With normalcy returning, NIMs+Fees have reached the desired range of 6.5%-7% despite carrying a negative carry of Rs. 64 Cr on additional liquidity

·Reduction in GS3 from 5.98% to 5.19% YoY, NS3 reduced from 2.83% to 1.67% YoY, Increase in PCR from 54% to 69% YoY

·Furthermore, we made incremental macro-prudential provisions of Rs. 512 Cr in Q2FY21 to strengthen our balance sheet.

*PAT in Q2FY20, before the impact of DTA, was Rs. 647 Cr.

Sharing an outlook for Q3FY21, Mr. Dubhashi further added, “The rural revival led by higher reservoir levels, better water management systems, solid monsoons as well as the farm bill reform, points towards the beginning of an upward swing for companies with robust rural business models.”

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