L&T Finance has reported a 27% year-on-year rise in consolidated profit after tax (PAT) to Rs 807 crore in the fourth quarter of FY26, banking on a sharp rise in interest income and retail disbursements. On a sequential basis, net profit has risen 6%. The total revenue from operations has increased to Rs 4,771.03 crore in Q4FY26 compared with Rs 4,578.27 crore in Q3FY26 and Rs 4,022.92 crore in Q4FY25.
In an interview with Kshipra Petkar, MD & CEO Sudipta Roy says that with microfinance asset quality back to pre-crisis levels and disbursements gaining momentum, the non-bank lender aims for a growth rate above 20% in FY27, even as it remains watchful of liquidity conditions and global risks. Excerpts:
Growth has been strong. What is the FY27 strategy?
Under Lakshya 31, we are targeting 20% plus growth. Most businesses are performing well. Microfinance has stabilised, with asset quality back to pre-crisis levels and disbursements picking up over the past few months. Personal loans and two-wheeler loans are strong and tractors remain stable, though we are monitoring the monsoon. Overall, we are confident of delivering 20% plus growth in FY27.
Are you seeing any first- or second-order impact from the West Asia crisis?
We are not seeing any visible impact on our portfolio. However, we remain cautious. While the government has insulated the economy from the energy crisis so far, sustained geopolitical stress could lead to second- or third-order effects. We do not have wholesale exposure or large West Asia-linked clients. In SME lending, we have tightened guardrails in certain clusters and have maintained tighter underwriting standards for the past 6-9 months following last year’s stress.
How do you see the trajectory of your cost of borrowings and funding mix evolving in FY27?
Our borrowing cost declined 67 basis points year-on-year for the quarter and 48 basis points for the full year. However, going forward, we do not expect significant further benefit from rate reductions. Liquidity tightening, global pressures, and currency management could lead to funding challenges next year. We are keeping all options open — commercial paper (currently 7-8% of borrowings, with room to increase to 15%), overseas borrowings via ECB or bonds, bank lines, and retail bond issuances. We expect a couple of retail bond issuances in FY27, depending on market conditions.
What is your credit cost outlook?
Currently, we are around 2.4-2.6%. Directionally, by the end of FY27, we expect credit costs to move closer to the 2-2.2% range.
What is your guidance on margins?
We guide on NIM plus fees, as processing fees are integral to our lending model. Our target corridor remains 10-10.5%. As microfinance and rural business loan disbursements accelerate, we expect to manage margins within that range despite potential marginal increases in borrowing costs.
How much of the repo rate transmission has benefited NBFCs?
Till about a month ago, around 60-65% transmission had occurred. However, liquidity conditions are more critical than repo cuts for strong, AAA-rated NBFCs like us. If liquidity is adequate, we can raise funds efficiently regardless of marginal rate cuts. Global factors are currently influencing yields more than domestic repo adjustments. Therefore, in the medium term, repo rate reductions may not translate into as much benefit as commonly expected.