L&T Finance Q2FY27 PAT Up 33% YoY to ₹975 Crore

L&T Finance Limited – Investor Presentation Summary

Key Operational Highlights

Loan Book: ₹1,36,635 crore, a 28% YoY and 5% QoQ increase.
Disbursements: ₹24,027 crore, a 27% YoY and 1% QoQ increase.
Distribution Network Growth: Rural Group Loans & MFI activated 25,670 new villages (Q2FY27 vs 28,229 in Q2FY26). Two Wheeler Finance active sourcing points increased to 9,453 (Q2FY27 vs 8,515 in Q2FY26). Gold Finance active branches surged to 502 (Q2FY27 vs 130 in Q2FY26).
Key drivers: Strong growth in Gold Finance (229% YoY disbursement growth), Personal Loans (45% YoY), and expansion of the distribution footprint.
Customer Base: Over 93 lakh+ customer database and 3 crore+ active customers.

Segment-wise Performance

Rural Business Finance Book: ₹33,465 crore, up 22% YoY. Comprises Rural Group Loans & Business Loans (₹31,377 crore, +18% YoY) and Micro LAP (₹2,088 crore, +148% YoY).
Urban Finance Book: ₹67,668 crore, up 32% YoY. Comprises Two Wheeler Finance (₹16,158 crore, +24% YoY), Personal Loans (₹18,664 crore, +72% YoY), Home Loans (₹23,810 crore, +15% YoY), and LAP (₹9,036 crore, +33% YoY).
Farmer Finance Book: ₹17,397 crore, up 9% YoY (all Farm Equipment Finance).
SME Finance Book: ₹9,495 crore, up 27% YoY.
Gold Finance Book: ₹5,043 crore, up 242% YoY.
Acquired Portfolio Book: ₹1,531 crore, up 59% YoY.
Wholesale Finance Book: ₹2,036 crore, down 18% YoY, comprising Infrastructure Finance (₹1,247 crore) and Real Estate Finance (₹789 crore).
Explanation: Growth was predominantly driven by the retail segments, especially unsecured products (Personal Loans) and secured products like Gold Loans and Two Wheeler finance. The wholesale book continues to be deliberately run down.

Financial Highlights

Revenue: Not explicitly stated as a single line item; derived from components.
Interest Income: ₹4,945 crore, up 28% YoY.
NIM (Net Interest Margin): ₹2,975 crore, up 34% YoY.
Fee & Other Income: ₹537 crore, up 13% YoY.
Total Income: ₹3,512 crore, up 30% YoY.
EBITDA: Not explicitly stated.
PAT: ₹975 crore, up 33% YoY and 8% QoQ.
EPS: ₹3.9, up 33% YoY.
Margins: NIM at 8.88% (Q2FY27 vs 8.42% in Q2FY26). NIM + Fees at 10.48% (Q2FY27 vs 10.22% in Q2FY26). PAT margin calculated at ~27.8% of total income.
YoY/QoQ comparison: Strong improvement across all key profitability metrics (PAT, RoA, RoE) both year-on-year and quarter-on-quarter.
Drivers of financial performance: Higher loan growth leading to increased NII, controlled operating expenses (Opex at 4.08% of book), and improving credit cost (2.46%).
Comparison to market estimates: Not Specified.
Key Risks: Disclosed risks include managing multi-dimensional risks through cycles, raw material price hikes (implied for customers), and regulatory risks. The company employs credit guarantee schemes (CGFMU, CGTMSE) and parametric insurance to mitigate risks in rural and SME portfolios.

Geographical Revenue Split

Balance Sheet Snapshot

Net Debt/Equity: Debt/Equity (Closing) at 4.21x (Q2FY27 vs 3.71x in Q2FY26). Debt/Equity (Average) at 4.05x (Q2FY27 vs 3.59x in Q2FY26).
Reserves: Not explicitly broken out; Networth is ₹29,267 crore.
Current Assets/Liabilities: Not Specified.
Working Capital/Leverage Metrics: Not Specified.
Financial Health Insights: The company maintains a strong liquidity position with cumulative positive gaps. It has a diversified liability mix and achieved its lowest-ever quarterly Weighted Average Cost of Borrowing (WACB) of 6.95% in Q2FY27. CRAR stands at a healthy 18.67% (Tier I: 17.50%, Tier II: 1.17%).

Capex & Cash Flow Health

Capital Expenditure: Not Specified in monetary terms. The focus is on tech investments.
Free Cash Flow: Not Specified.
Operating Cash Flow: Not Specified.
Net Debt Movement: Not Specified.
Investment Rationale: The strategic rationale is heavily focused on technology upgrades and building a deep tech, AI-native platform to drive efficiency and growth, as outlined in the Lakshya 2031 plan.

Strategic & R&D Initiatives

Investments in Innovation: The entire presentation is centered on a deep tech and AI-powered strategy. Key platforms include:
CYCLOPS: A proprietary AI-powered underwriting engine for omni-product, omni-customer decisioning. It has improved prime share in the Two-Wheeler book to 84%.
NOSTRADAMUS: An automated portfolio monitoring engine for early warning signals and stress testing.
AI Co-pilots: Used across underwriting, fraud, service, and collections to speed up decisions.
AI Citizen Initiative: An enterprise-wide program using Gemini Enterprise Agent Platform to boost operational productivity. 1,200+ employees have created 21,000+ chat sessions and 5,000+ agents.
HERCULES: An Agentic AI-based cross-sell platform (Phase 1 launched in Q2FY27).
Expected impact on growth: The tech stack is intended to deliver sharper customer selection, better pricing, lower bounce rates/NNS, and significant scale-up in disbursements from the HERCULES platform by Q4FY27/early FY28.
Strategic Rationale: The core operating philosophy is to be a "Risk-first, Tech-first, AI-native Retail Financial Services Institution" to enable predictable growth through cycles, improve margins, and gain market share.

Industry Trends & Business Environment

Macro/Industry Trends: Not explicitly discussed in detail.
Impact on Company: The company's proactive Asset-Liability Management helped it achieve a low WACB of 6.95%, navigating the interest rate environment effectively.

Management Commentary & Growth Outlook

Strategic Outlook: The company is focused on "Accelerating the growth agenda" as part of its Lakshya 2031 plan, unveiled in April 2026. The goal is to transition from transformation to delivery.
FY Guidance: The Lakshya 2031 goals are Book Growth of 20%+, Credit cost <2%, RoA of 3%-3.2%, and RoE of 16%-18%. Q2FY27 performance against these is: Book Growth (28% - IN LINE), Credit cost (2.46% - WIP), RoA (2.60% - WIP), RoE (13.56% - WIP).
Market Share Targets: Not Specified.
Risks and Opportunities: Management highlights the objective of maintaining predictability through cycles with a conservative Provision Coverage Ratio (PCR).

ESG Updates

The company secured an NSE Sustainability Rating of 78 (Leader) and a CRISIL ESG rating of 81.9 (High footprint, Low Risk).
39% of the loan book finances sustainable livelihoods; 64% of the workforce is employed from Rural.
Initiatives include powering 78 branches with renewable energy, solar rooftop rollout at 100 locations, e-waste recycling (693 kg), and AI-based energy monitoring.
CSR efforts include the Digital Sakhi project for financial inclusion of women (3.90 lakh+ women reached), disaster relief (1.28 lakh+ beneficiaries), and water conservation projects (Jalvaibhav 2.0).
Diversity: 8.1% female participation in the workforce.