L&T Finance: Business Overview & Financial Analysis
L&T Finance Limited (formerly L&T Finance Holdings Limited) is a Non-Banking Financial Company (NBFC) headquartered in Mumbai, Maharashtra, and part of the Larsen & Toubro Group. The company provides a range of retail financial products and services across urban and rural India. Under its strategic transformational roadmap, L&T Finance Limited has transitioned into a retail-focused NBFC, offering rural group loans, farm equipment finance, two-wheeler loans, personal loans, home loans, loan against property, and SME finance, while winding down its wholesale loan portfolio.
Key Financial Ratios & Performance Indicators of L&T Finance (Q4 FY26)
L&T Finance maintained capital buffers and profitability metrics across its retail operations.
- Capital Adequacy Ratio (CRAR) – 22.81%
- Tier-I Capital Ratio – 20.15%
- Net Interest Margin + Fee Income (NIM+Fee) – 10.82%
- Gross Stage 3 Ratio (GNPA) – 3.05%
- Net Stage 3 Ratio (NNPA) – 0.79%
- Provision Coverage Ratio (PCR) – 74.80%
- Return on Assets (ROA) – 2.47%
- Return on Equity (ROE) – 11.85%
The company maintained a CRAR of 22.81% in Q4 FY26, well above the regulatory requirement. Net Interest Margin plus fee income stood at 10.82%, while asset quality remained controlled with a Net Stage 3 ratio of 0.79% and a Provision Coverage Ratio of 74.80%.
AUM & Loan Portfolio Mix of L&T Finance (Q4 FY26)
L&T Finance has completed its retailisation strategy, with retail assets forming nearly the entire loan book.
- Total Assets Under Management (AUM) – Rs 93,723 crore (+16% YoY)
- Retail AUM Share – 96% of Total AUM
- Rural Group Loans & Micro Finance – 32% of Retail AUM
- Two-Wheeler Finance – 12% of Retail AUM
- Farm Equipment Finance – 15% of Retail AUM
- Personal Loans & Consumer Loans – 17% of Retail AUM
- Home Loans & Loan Against Property (LAP) – 18% of Retail AUM
- SME & Commercial Finance – 6% of Retail AUM
Total AUM expanded by 16% year-on-year to Rs 93,723 crore in Q4 FY26, driven by retail disbursements across rural and urban channels. Wholesale book run-offs brought the retail share of total AUM to 96%, fulfilling its long-term strategic retailisation target ahead of schedule.
Quarterly Disbursements & Volume Trends of L&T Finance (Q4 FY26)
L&T Finance recorded retail disbursements across core product verticals in Q4 FY26.
- Total Quarterly Disbursements – Rs 16,340 crore (+13% YoY)
- Rural Group Loans Disbursements – Rs 5,420 crore
- Two-Wheeler Finance Disbursements – Rs 2,450 crore
- Farm Equipment Finance Disbursements – Rs 2,110 crore
- Personal & Consumer Loan Disbursements – Rs 2,850 crore
- Housing & LAP Disbursements – Rs 2,380 crore
- SME Finance Disbursements – Rs 1,130 crore
Quarterly disbursements reached Rs 16,340 crore, up 13% year-on-year, supported by festive financing and digital lead sourcing. Rural group loans and urban personal loans formed the largest share of new customer additions during the quarter.
Asset Quality & Provisioning Metrics of L&T Finance (Q4 FY26)
L&T Finance tracks credit risk through Stage 1, Stage 2, and Stage 3 asset classifications.
- Gross Stage 3 Assets – Rs 2,858 crore (3.05% of AUM)
- Net Stage 3 Assets – Rs 740 crore (0.79% of AUM)
- Stage 2 Assets Share – 2.15% of AUM
- Total Credit Cost (Annualised) – 2.12%
- Macroeconomic & Countercyclical Provisions – Rs 1,142 crore
Gross Stage 3 assets stood at 3.05% of AUM in Q4 FY26, while credit costs remained at 2.12% on an annualised basis. The company maintains an additional macroeconomic and countercyclical provision buffer of Rs 1,142 crore to absorb credit shocks.
Borrowing Profile & Funding Costs of L&T Finance (Q4 FY26)
L&T Finance relies on a diversified borrowing mix comprising domestic bonds, bank lines, and commercial paper.
- Total Borrowings – Rs 81,420 crore
- Bank Term Loans & NCDs Share – 82% of Total Borrowings
- Commercial Paper Share – 6% of Total Borrowings
- External Commercial Borrowings (ECB) / Retail NCDs – 12% of Total Borrowings
- Weighted Average Cost of Borrowing – 7.82%
The weighted average cost of borrowing stood at 7.82% in Q4 FY26. Long-term bank loans and Non-Convertible Debentures (NCDs) represent 82% of total liabilities, maintaining asset-liability alignment.
Digital Banking & Customer Touchpoints of L&T Finance (Q4 FY26)
L&T Finance uses its proprietary "PLANET" mobile application and partner integrations for customer servicing and loan origination.
- Total Customer Touchpoints / Branches – 1,750+ locations
- PLANET App Downloads – 1.15 crore+ cumulative downloads
- Digital Sourcing Share (Two-Wheeler & Personal Loans) – 85%+
- Total Active Customer Base – 2.3 crore+ customers
Over 85% of two-wheeler and personal loans are processed through digital workflows. The PLANET customer application crossed 1.15 crore cumulative downloads, facilitating self-service loan servicing, collections, and cross-selling.
Consolidated Financial Performance of L&T Finance (Q4 FY26 & FY26)
L&T Finance delivered top-line income growth and profit expansion during the fourth quarter and full financial year FY26.
- Q4 Total Income – Rs 3,892 crore (+11% YoY)
- Q4 Net Interest Income (NII) – Rs 2,105 crore (+14% YoY)
- Q4 Net Profit (PAT) – Rs 654 crore (+18% YoY)
- Full Year FY26 Total Income – Rs 14,812 crore (+12% YoY)
- Full Year FY26 Net Profit (PAT) – Rs 2,492 crore (+19% YoY)
- Board Recommended Dividend (FY26) – Rs 2.50 per equity share
Net profit for Q4 FY26 grew 18% year-on-year to Rs 654 crore, driven by expanding retail loan assets and lower credit costs. Full-year FY26 net profit touched Rs 2,492 crore, and the Board recommended a dividend of Rs 2.50 per equity share.
Management Commentary & Strategic Outlook of L&T Finance (FY26–FY28)
Management guidance highlights targets under its "Lakshya 2026" strategic plan, focusing on retail growth, asset quality, and digital expansion.
- Management targets sustaining a retail AUM growth rate of 18%–20% annually over the medium term.
- Retail assets are projected to remain above 95% of total AUM as legacy wholesale assets are wound down.
- Credit cost guidance is set in the 1.8%–2.2% range, supported by automated collection scoring models.
- Return on Assets (ROA) is targeted to be maintained in the 2.6%–2.8% band through operating leverage and fee income.
- Distribution network expansion will focus on expanding SME and home loan touchpoints in Tier-2 and Tier-3 cities.
Sources & References
- L&T Finance Limited Q4 & FY26 Investor Presentation (April 2026)
- L&T Finance Limited Q4 FY26 Earnings Call Transcript (April 2026)
- L&T Finance Limited BSE & NSE Official Corporate Disclosures
- Ticker Finology L&T Finance Page
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Disclaimer
The information presented above on L&T Finance Limited has been compiled from the company's Annual Reports, Investor Presentations, Earnings Call (Concall) Transcripts, official regulatory filings and the financial data available on Finology Ticker. Certain figures, classifications or comparisons may vary due to differences in accounting policies, reporting methodologies or subsequent restatements by the company. This content is intended solely for informational purposes and should not be considered as investment advice. Investors are advised to refer to the latest company filings and the updated financial data, ratios and disclosures available on this Finology Ticker L&T Finance Limited page before making any investment decision. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.