Sharekhan has given Buy recommendation for L&T Finance Holding with a target price of Rs. 124 in its research report issued on Dec 24, 2021

Sharekhan’s research report on L&T Finance Holding

L&T Finance Holding Limited (LTFH) has proposed to hive off the mutual fund business, L&T Investment Management Limited for ~ Rs. 3,191 crore – Rs. 3,250 crore at 4.2% of QAAUM of L&T Mutual Fund as of September 2021, below the expectations of Rs. 5,000 crore. Apart from this, the LTFH would be entitled to excess cash in L&T Investment Management Limited. We believe, LTFH is a structural play on the credit growth story of India with rural credit displaying green shoots, recovery in housing sales, and continued government spending in infrastructure projects. On the asset-quality front, consolidated GNPA remained unchanged at 5.74% q-o-q in Q2FY2022, supported by collection efficiency reaching pre-Covid levels across retail products.

Outlook

LTFH trades at 1.0x/0.8x/0.5x its FY2022E/FY2023E/FY2024 book value, which is reasonable. The stock has corrected by 32% from its peak, which offers an attractive value buy from lower levels. We maintain Buy with a revised PT of Rs. 124.

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