Future strategy is all about sustaining this growth: L&T Finance CEO

As far as retail growth is concerned, you would see the target was 25% growth, and we have consistently achieved more than 30% growth, he said

Dinanath Dubhashi, managing director (MD) and chief executive officer (CEO), L&T Finance Holdings, says the company has over-achieved the Lakshya 2026 targets two and half years ahead of schedule. In an interview with Manojit Saha for the Business Standard Banking Show, Dubhashi says the focus will be to keep asset quality and profitability pristine. Edited excerpts:

Two years ago, a strategic roadmap — Lakshya 2026 — was initiated. Where does L&T Finance stand in terms of achieving the target?

Lakshya was a strategy, which was made from FY22 to FY26 and that strategy had only one goal — to establish or transform L&T Finance into a digitally-enabled customer-centric retail finance company, and a leading one. We set four quantitative targets. About two and half years back, we were almost a 50-50 wholesale-retail company. We said that by March 2026, we will become at least 80 per cent retail. Second was that we will grow retail, because we didn't want to achieve that only by reducing wholesale. Also, we will grow retail book by at least 25 per cent every year. Third was, while doing this growth, we should keep asset quality pristine. And because of that, we set a goal that our gross net performing asset (GNPA), GS3 as it is called, should be maximum 3 per cent for retail, and NS3, net stage 3, should be a maximum 1 per cent. Lastly, all of this should convert into profitability. So, we set a target of 2.8-3 per cent for retail return on assets (RoA). These were the four targets we set. Retail has already become 88 per cent. We are confident that we will end this year well above 90 per cent, closer to 95 per cent. As far as retail growth is concerned, the target was 25 per cent growth, and we have consistently achieved more than 30 per cent. Retail RoA, where our target was 3 per cent, we have already reached 3.3 per cent as of September 2023.

You have over-achieved your target two years before date. So, what is the next phase of growth, say over the next 2-3 years?

Lakshya 26 is a four-year plan and we will stick to it. But the very important part is we realise that we have achieved all the ratios. The important thing for us is to keep growing from here at this rate, while keeping asset quality and profitability pristine. And hence, the future strategy is all about sustaining this growth. We have already put that strategy in place for the next 4-5 years also, and March 2026 will be a part of it.

What is your loan book now and where do you see it by March end?

Retail loan book in September was close to about Rs 70,000 crore. We are very confident that we are growing by more than 30 per cent year-on-year (Y-o-Y). If we maintain that growth rate, we should be close to Rs 80,000 crore by the end of the year.