Citi has maintained its buy rating on L&T Finance with a target price of ₹330 per share, citing strong momentum in retail disbursements and improving business mix that continues to support profitability and return ratios.
The brokerage noted that retail disbursements excluding gold loans rose to ₹213 billion, marking a robust 40% year-on-year and 19% quarter-on-quarter growth. Including gold loan disbursements of ₹14 billion, overall retail disbursements were up 43% sequentially, driving 21% YoY growth in retail AUM to ₹1.11 trillion. As a result, the share of retail AUM has improved to over 98%, underscoring L&T Finance’s continued pivot towards a granular and diversified retail franchise.
Citi highlighted healthy traction across multiple retail verticals. Microfinance institution (MFI) disbursements rose 7% QoQ and 47% YoY to ₹67.4 billion, while urban finance disbursements jumped 19% QoQ and 48% YoY. Farmer finance also saw a sharp acceleration, with disbursements up 68% QoQ and 11% YoY, reflecting seasonal momentum and deeper penetration. SME finance disbursements grew 24% YoY and 6% QoQ, indicating steady recovery in small business credit demand.
From a profitability perspective, Citi said it is building in credit costs of 2.65–2.70%, factoring in a balanced risk outlook across segments. Despite this, the brokerage expects return on assets to remain healthy at around 2.4%, supported by operating leverage, scale benefits, and the increasing dominance of retail assets.
Citi concluded that L&T Finance’s sustained retail-led growth, improving asset mix and stable profitability outlook reinforce its constructive stance on the stock.
Disclaimer: The views and recommendations above are those of Citi. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
