L&T Finance's retail-driven growth hinges on execution

economictimes.indiatimes.com:

Sudipta Roy, will need to focus on the execution of retail strategy, improving collection efficiency and ensuring an uneventful reduction in the wholesale loan book, analysts said. While the company has pivoted towards retail loans and despite its fast growth pace, the overhang of the wholesale book means that the company's assets have been shrinking. This comes even as higher-rated peers Bajaj Finance and Cholamandalam Investment & Finance are growing their loans at 20-30%.

Analysts said Roy will be judged on his execution skills. «The transition from wholesale to retail has already begun. Now it's time for execution.

The company has not been able to grow very quickly and the market hopes that the new leadership will be able to provide the impetus for growth. In a nutshell, it is all about execution from here,» said Asutosh Mishra, head of research at Ashika Stock Broking. As part of its Lakshya 2026 goals started in April 2022, L&T Finance Holdings targets to increase the share of retail in its loan book to 80% by March 2026, grow the segment at a compounded rate of 25% and keep gross NPAs below 3% of advances.

To be certain, at the end of March 2023, the company is well on its way to achieving its target with retail loans at 75% of the loan book, growing 35% year-on-year, and gross NPA at 3.41%. However, despite the sharp rise in retail disbursals, the company's total loan book has fallen 8% primarily because wholesale loans have halved to ₹19,512 crore in March. Retail loans include farm equipment, microfinance, two-wheelers, consumer and mortgages.