L&T Finance Holdings lost 4.14% to Rs 70.55 at 11:06 IST on BSE after consolidated net profit declined 62.77% to Rs 109.68 crore on 30.52% growth in total income to Rs 1283.37 crore in Q3 December 2013 over Q3 December 2012.
The Q3 result was announced after trading hours on Thursday, 23 January 2014.
Meanwhile, the S&P BSE Sensex was down 166.95 points or 0.78% at 21,206.71
On BSE, 4.57 lakh shares were traded in the counter as against average daily volume of 8.27 lakh shares in the past one quarter.
The stock hit a high of Rs 71.85 and low of Rs 69.15 so far during the day. The stock had hit a record high of Rs 89 on 29 January 2013. The stock had hit a 52-week low of Rs 53 on 7 August 2013.
The stock had outperformed the market over the past one month till 23 January 2014, rising 1.59% compared with the Sensex's 1.29% rise. The scrip had, however, underperformed the market in past one quarter, falling 4.79% as against Sensex's 2.92% rise.
The large-cap company has equity capital of Rs 1717.60 crore. Face value per share is Rs 10.
L&T Finance Holdings said that the consolidated net profit (excluding exceptional items) has been impacted by higher credit costs compared to previous year. Consolidated net profit (excluding exceptional items) fell by 7.3% to Rs 109.7 crore in Q3 December 2013 over Q3 December 2012.
The contribution before credit costs (excluding exceptional items) grew by 9.9% to Rs 310.5 crore in Q3 December 2013 over Q3 December 2012. Continued momentum in the retail finance business and reduction in the losses in the investment management business has also aided profit growth.
Gross NPA (non performing assets) stood at Rs 1065.2 crore or 2.93% as a percentage of gross advances as on 31 December 2013 as against Rs 992.9 crore or 2.89% as on 30 September 2013. The continuing stress in the economy has resulted in slippages in asset quality mainly in the construction equipment, commercial vehicle, corporate and restructured assets. Net NPA stood at Rs 739.8 crore or 2.05% as a percentage of gross advances as on 31 December 2013 as against Rs 654.6 crore or 1.93 % as on 30th September 2013.
In its outlook, L&T Finance Holdings said that the macroeconomic environment continues to remain challenging, with no consistent signs of an improvement in the overall economy. Though overall inflation has softened slightly in December 2013, the core inflation remains high. While regulatory rates may be maintained at current levels to balance growth and inflation concerns, interest rates are unlikely to soften in the near term. The clearances to long pending infrastructure projects by the government could revive the capex cycle and investments in the medium to long term. Good monsoons are likely to result in improved agricultural production and keep the rural economy buoyant, contributing to growth in disbursements and advances. Thus our strategy of focusing on the B2C segments to drive growth is expected to maintain the momentum in growth.
In this uncertain environment, we continue to be cautious in credit selection and aggressive in asset monitoring. Margins are expected to be stable, with interest rates expected to soften in the medium term. We expect asset quality and credit costs to gradually improve from Q4FY14 onwards, L&T Finance Holdings said.
L&T Finance Holdings said that loans and advances grew by 21.1% to Rs 37820.4 crore as on 31 December 2013 over the previous year. The average assets under management (AUM) of investment management business grew by 12.7% in Q3 December 2013 compared to Q2 September 2013 and achieved breakeven on a run rate basis for the quarter, the company said.
L&T Finance Holdings said that the continuing stress in the economy has resulted in slippages in asset quality mainly in the construction equipment, commercial vehicle and corporate segments.
L&T Finance Holdings said that the company continues to follow a conservative provisioning policy with contingent and voluntary provisions of Rs 299.8 crore over and above RBI norms. The private wealth management business continued to build momentum with the client base crossing 1,600 and an average assets under service of Rs 5038.1 crore, the company said.
L&T Housing Finance completed acquisition of a mortgage loan portfolio via the assignment route on 30 November 2013. The acquired portfolio has a POS of Rs 698 crore with 76% of the portfolio being Loan Against Property (LAP). This gives meaningful size to the housing finance business, enabling efficient capital utilization and widening the reach to customers across 68 cities and 16 states, the company said.
Commenting on the results and financial performance, Mr. Y. M. Deosthalee, Chairman & Managing Director, L&T Finance Holdings, said, "We are happy to note that our focus on the B2C segments - rural products, personal vehicle finance and housing finance - continues to provide momentum to growth. At the same time, the continuing stress economy has resulted in elevated levels of credit costs, which have impacted the overall returns for the quarter. We expect a gradual improvement in credit costs from 04FY14 onwards. We are also pleased that, as per our plan, our investment management business has achieved break-even on a run-rate basis."
L&T Finance Holdings said that in line with the company's strategy, momentum continues in the B2C segments with healthy growth in disbursements in Rural Products Finance, Personal Vehicle Finance and Housing Finance businesses. Disbursement growth in wholesale segment was driven largely by opportunities in financing operational assets.
There has been a general slowdown in the economy that has been characterized by absence of new capex, stretched working capital cycles of corporate and resulted in a subdued investment climate. Consequently we continue to follow a cautious approach to credit selection and hence disbursements in B2B segment (corporate, construction equipment and commercial vehicle segments) have been muted, L&T Finance Holdings said.
L&T Finance Holdings is a financial holding company offering a diverse range of financial products and services across the corporate, retail and infrastructure finance sectors, as well as mutual fund products and investment management services, through its wholly-owned subsidiaries.
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