L&T Finance has reported a 29% year-on-year rise in consolidated profit after tax (PAT) to Rs 902 crore in the first quarter of FY27. The total revenue from operations has increased to Rs 5,212.92 crore compared with Rs 4,259.57 crore a year ago. Sudipta Roy, MD & CEO, tells Christina Titus that a weak monsoon is expected to have a limited impact on the portfolio. Excerpts:
What is your AUM growth target for FY27?
As part of Lakshya 2031 plan, we target AUM growth of more than 20% and remain committed to that. If there is risk-calibrated growth available in the market, we will not shy away from taking it. However, we are cautious because of the risk of an uneven monsoon and the ongoing Middle East conflict.
We remain focused on our current portfolio mix. Our secured-to-unsecured mix is about 57:43 and our target is to maintain at 60:40 over next two years.
How do you see weak monsoon influencing the outlook for the microfinance sector?
The microfinance industry has come out of an asset quality cycle. About 18 months after a stress, you hit a Goldilocks window with little risk emergence. The microfinance sector’s balance sheets have contracted and industry is quite being leveraged. So, even a weaker monsoon—given healthy reservoir levels—shouldn’t cause significant spillovers. I expect the industry to remain stable this fiscal year.
How do you expect the cost of funds and margins to pan out in FY27, given possible MCLR hike?
We expect NIM plus fee income to remain within the guided range of 10–10.5%. Therefore, I don’t expect the weighted average borrowing cost to rise. It should stay stable or improve slightly.
How have the new gold loan rules introduced in April affected your business?
The new RBI circular requires bureau checks for loans of certain ticket size, which has hurt customers with poor credit histories. The industry has adopted tiered LTVs based on ticket size and is still adjusting to the change. In April volumes fell sharply across the industry, but they began normalising in May–June. I expect the industry to get back to normal trajectory in Q2.
How are you addressing heightened gold price volatility?
We monitor loan-to-value (LTV) ratios daily and issue margin calls immediately if they breach prescribed limits. We maintain a conservative average LTV of 67–69% to provide a buffer against price fluctuations.