Expansion Focus and Strategy
L&T Finance is actively expanding its presence in the eastern part of India, particularly in West Bengal and Odisha. The company is focusing on expanding formal financial channels in rural areas of states like Bihar, Odisha, West Bengal, Chhattisgarh, and Assam.
Microfinance Sector Performance
- L&T Finance has maintained a lower average credit cost of less than 5% in the microfinance business, compared to the industry average of 8-10%.
- Despite sector-wide challenges, L&T Finance's internal risk control measures have led to a collection efficiency of 99.6%, excluding Karnataka.
- The sector is expected to normalize by August-September.
Gold Loan Business Strategy
- The integration of Paul Merchants Finance's gold business is expected to be completed by June 15.
- L&T Finance plans to expand its branches to around 200 by the end of the year, focusing on women customers, who comprise 100% of its active micro loan clientele.
- While the gold loan market is currently strong, caution is advised to prevent customer over-leverage. Market growth potential is estimated at 20-25%.
Growth and Fundraising Plans
- The company is part of the L&T group's 5-year plan, Lakshya, targeting a 20-25% growth rate this year.
- L&T Finance has agreements with Japan International Cooperation Agency and Asian Development Bank for USD 125 million each.
- The company is well-capitalized and may consider raising capital around late 2027 or early 2028, with ROEs projected to reach 14-15%.
