LTF - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.7
| Stock Code | LTF | Market Cap | 71,277 Cr. | Current Price | 285 ₹ | High / Low | 329 ₹ |
| Stock P/E | 25.4 | Book Value | 104 ₹ | Dividend Yield | 0.97 % | ROCE | 8.70 % |
| ROE | 10.8 % | Face Value | 10.0 ₹ | DMA 50 | 293 ₹ | DMA 200 | 249 ₹ |
| Chg in FII Hold | 0.26 % | Chg in DII Hold | 1.00 % | PAT Qtr | 751 Cr. | PAT Prev Qtr | 728 Cr. |
| RSI | 42.6 | MACD | -5.53 | Volume | 60,44,360 | Avg Vol 1Wk | 51,07,090 |
| Low price | 131 ₹ | High price | 329 ₹ | PEG Ratio | 0.20 | Debt to equity | 3.76 |
| 52w Index | 77.4 % | Qtr Profit Var | 21.3 % | EPS | 11.1 ₹ | Industry PE | 19.4 |
📊 Analysis: L&T Finance Holdings (LTF) trades at a P/E of 25.4, which is higher than the industry average of 19.4, indicating a valuation premium. ROE at 10.8% and ROCE at 8.7% are modest, reflecting average capital efficiency. The PEG ratio of 0.20 suggests growth is attractively priced, making it a potential candidate for accumulation. Dividend yield at 0.97% provides some income support. Debt-to-equity ratio of 3.76 highlights high leverage, typical for NBFCs, but adds risk. Technically, the stock is trading near its 200 DMA (249 ₹) and slightly below its 50 DMA (293 ₹), showing neutral to weak momentum. RSI at 42.6 indicates mildly oversold conditions, while MACD (-5.53) signals bearishness. Quarterly PAT growth (+21.3%) shows strong earnings momentum.
💰 Ideal Entry Price Zone: Between 270 ₹ – 285 ₹ (near support levels and fair valuation zone). Accumulation is advisable in this range for long-term investors.
📈 Exit Strategy / Holding Period: If already holding, maintain a medium to long-term horizon (3–5 years) given strong earnings growth and attractive PEG ratio. Consider partial profit booking if price revisits 320–325 ₹ levels. Long-term investors should monitor leverage and profitability metrics closely.
✅ Positive
- PEG ratio of 0.20 indicates growth is attractively priced.
- Quarterly PAT growth (+21.3%) highlights strong earnings momentum.
- DII holdings increased (+1.00%), reflecting domestic institutional confidence.
- Strong 52-week performance (+77.4%).
⚠️ Limitation
- High leverage with debt-to-equity ratio of 3.76.
- ROE (10.8%) and ROCE (8.7%) are modest compared to industry leaders.
- Valuation premium (P/E 25.4 vs Industry 19.4).
- Dividend yield at 0.97% is modest for income investors.
📉 Company Negative News
- MACD (-5.53) signals bearish trend.
- Stock trading below 50 DMA shows weak short-term momentum.
📈 Company Positive News
- Quarterly PAT improved from 728 Cr. to 751 Cr.
- FII holdings increased slightly (+0.26%).
- DII holdings increased (+1.00%), signaling strong domestic confidence.
🏭 Industry
- NBFC sector benefits from rising credit demand and financial inclusion initiatives.
- Industry PE at 19.4, showing LTF trades at a premium valuation.
- Sector outlook supported by economic expansion and retail lending growth.
🔎 Conclusion
LTF is a moderate candidate for long-term investment, supported by strong earnings growth and attractive PEG ratio. However, high leverage and modest ROE/ROCE warrant caution. Ideal entry is around 270–285 ₹. Existing investors should hold for 3–5 years, booking profits near 320–325 ₹ levels, while monitoring debt levels and valuation sustainability.