LTF - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.6

📊 Core Financials & Profitability

Earnings Growth: PAT rose from ₹631 Cr to ₹694 Cr QoQ, showing steady growth. EPS of ₹10.6 is solid for a ₹247 stock.

Return Metrics

ROE: 10.8% and ROCE: 8.7% — decent, though not exceptional.

Debt Profile: Debt-to-equity at 3.65 — high, but typical for NBFCs with leveraged lending models.

Dividend Yield: 1.11% — modest, with consistent payouts.

💸 Valuation Indicators

Metric Value Insight

P/E Ratio 23.5 Fairly valued vs. industry PE of 24.0.

P/B Ratio ~2.45 Reasonable relative to book value ₹101.

PEG Ratio 0.18 Very attractive — strong growth at a low valuation.

🔍 Conclusion: L&T Finance is undervalued relative to its growth potential. PEG ratio suggests significant upside, especially with improving fundamentals.

🏦 Business Model & Competitive Edge

Core Operations: L&T Finance is a diversified NBFC offering retail, rural, and infrastructure financing.

Strategic Strengths

Shareholders earned a 33% CAGR over 5 years, with a 319% total shareholder return

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Strong digital transformation and retail focus post restructuring.

Institutional confidence: FII up 0.71%, DII up 0.82%.

Growth Outlook

Analysts forecast targets ranging from ₹240 to ₹260, with Motilal Oswal and Sharekhan maintaining “Buy” ratings

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EPS growth of 11% annually over five years, with sentiment improving in recent quarters

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📉 Technicals & Entry Zone

RSI: 81.4 — overbought zone, caution advised.

MACD: 8.71 — strong bullish momentum.

DMA Levels: Price well above both 50-DMA and 200-DMA — trend is strong but overheated.

📌 Suggested Entry Zone: ₹215–₹225 — near 50-DMA, offering better risk-reward.

🕰️ Long-Term Holding Guidance

Hold if Invested: Strong fundamentals, digital pivot, and institutional backing support long-term compounding.

Avoid Fresh Entry at Current Levels: Wait for RSI to cool below 65.

Monitor: Retail loan book growth, asset quality, and cost-to-income ratio.

You can explore Trendlyne’s analyst reports and price targets or Simply Wall St’s shareholder return analysis for deeper insights. Let me know if you'd like a peer comparison with Bajaj Finance or M&M Financial next.

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trendlyne.com

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