Brokerage firm Macquarie has initiated coverage on L&T Finance with an 'outperform' rating and price target of ₹400 per share, indicating an upside of 23% from its previous close. According to reports from CNBC TV18, this represents the highest price target on the street among the 24 analysts who now have coverage on the stock. The brokerage highlighted that L&T Finance is a diversified retail lender that has fixed its legacy issues and now targets peer-like growth from a largely retailised book. As per Macquarie, the company has successfully addressed its historical challenges and is positioned for sustained growth in the retail lending segment.
As reported by CNBC TV18, L&T Finance shares are trading at a discount of 35% to 50% in comparison to their larger peers, making valuations attractive. This discount exists despite comparable Assets Under Management (AUM) and earnings growth expectations. For the stock to re-rate going forward, Macquarie wants to see strong earnings growth and an improvement in its Return on Assets (RoA). The brokerage remains confident that L&T Finance can deliver 28% earnings per share (EPS) compound annual growth rate (CAGR) over financial year 2026-2029. According to Macquarie, this valuation gap presents a compelling opportunity for investors seeking exposure to a well-positioned retail lender.
According to CNBC TV18, L&T Finance reported its June quarter earnings last month, with consolidated net profit increasing by 28.7% to ₹902 crore and revenue rising by 25% to ₹4,894.9 crore. The net interest income (NII) during the quarter was up 28.4% to ₹2,924.8 crore. At the end of the June quarter, the company's consolidated loan book reached a record of ₹1.29 lakh crore, up 27% from the previous year, driven by a 28% rise in its retail loan book. Retail disbursements rose 36% to ₹23,852 crore, while gross Stage 3 assets declined to 2.86% from 3.31% in the year-ago period, indicating improved asset quality.
As reported by CNBC TV18, of the 30 analysts who have coverage on the stock, 16 have a 'buy' rating, 10 have a 'hold' rating and one has a 'buy' rating. Despite the positive commentary from Macquarie, shares of L&T Finance had been trading 3% lower on Wednesday at ₹315.4, with this fall making the stock negative on a year-to-date basis. However, shares gained momentum on Wednesday, August 19, following the Macquarie coverage initiation, reflecting positive market sentiment toward the brokerage's optimistic outlook. The mixed market response highlights the ongoing debate among analysts about the stock's valuation and growth prospects.
