L&t Finance Ltd · NSE:LTF
L&t Finance — Q1FY24 Earnings Presentation
62 slides from L&t Finance's earnings presentation, Jul 19, 2023
Slide 1: Submission of investor / analyst presentation
(8 L&T Finance July 19, 2023 National Stock Exchange of India Limited BSE Limited Exchange Plaza, Corporate Relations Department, Plot No. C/1, G Block, 1st Floor, New Trading Ring, Bandra - Kurla Complex, Bandra (East), P. J. Towers, Dalal Street, Mumbai - 400 051. Mumbai - 400 001. Symbol: L&TFH S
Slide 2: Strategy & Results Update - Q1FY24
Strategy & Results Update - Q4FY23 and FY23 Strategy & Results Update – Q1FY24 e l&T Finance 1
Slide 3: Disclaimer
Disclaimer L&T Finance Holdings Limited (the “Company”) offers a range of financial products and services through its wholly-owned subsidiaries. L&T Finance (LTF) is the brand name of L&T Finance Holdings Limited and its subsidiaries. The information in this presentation is provided by the Company f
Slide 4: Lakshya 2026
Lakshya 2026 RETAIL. DIGITAL. SUSTAINABLE. To be a top-class ‘digitally-enabled’ retail finance company moving from ‘product-focused’ to ‘customer-focused’ approach 3
Slide 5: Lakshya 2026 Goals: Beginning of a 4-year journey from April 2022
Lakshya 2026 Goals: Beginning of a 4-year journey from April 2022 Retailisation Retail Growth Asset Quality RoA GS3 <3% >80% >25% CAGR 2.8% - 3% NS3 <1% 4
Slide 6: Agenda
Agenda A Journey towards Lakshya 2026 Q1FY24 in Perspective Fintech@Scale Update B Annexures 5 e l&T Finance
Slide 7: Performance against Lakshya 2026 goals – Q1FY24
Performance against Lakshya 2026 goals – Q1FY24 Retailisation Retail Growth Retail Asset Quality Retail RoA LAKSHYA 2026 GS3 <3% >80% >25% CAGR 2.8% - 3% GOALS NS3 <1% YEAR 0 - FY22 GS3 3.82% Q4 FY 51% 10% YoY RETAIL NS3 1.14% 2.58% 1.66% YEAR 1 - FY23 GS3 3.41% Q4 FY 75% 35% YoY RETAIL NS3 0.71% 2.
Slide 8: Retailisation: Growth in Retail and reduction in Wholesale
Retailisation: Growth in Retail and reduction in Wholesale in Rs Cr BOOK MIX Strong Retail Growth Accelerated Wholesale* Reduction 34% YoY 64,274 61,053 40,284 (65%) 47,794 YoY Q1 Q1 82% FY24 FY24 18% 19,840 14,292 . Q1FY23 Q4FY23 Q1FY24 Q1FY23 Q4FY23 Q1FY24 Retail growth diversified across Mature,
Slide 9: Retail: A deep pan India franchise
Retail: A deep pan India franchise in nos. 1 Geo presence 2 Channel presence 3 Customer Database LTF Retail Customer Franchise (Q1FY24 in numbers) RURAL 1,700+ Farm Equipment Two wheeler Active customer 89 Lac+ franchise 1.4 Cr+ Branches 2,500+ 6,500+ Dealer Partnerships Dealer Partnerships Rural SE
Slide 10: Translating to a robust Retail disbursement growth of 25% YoY
Translating to a robust Retail disbursement growth of 25% YoY in Rs Cr Retail Disbursements 11,282 11,193 8,938 Q1FY23 Q4FY23 Q1FY24 Farmer Finance Rural Business Finance Urban Finance SME Finance 1,757 4,401 4,511 4,526 4,187 1,532 1,556 3,811 3,462 667 607 68 Q1FY23 Q4FY23 Q1FY24 Q1FY23 Q4FY23 Q1F
Slide 11: Retail disbursement growth of 25% YoY (1/3)
Translating to a robust Retail disbursement growth of 25% YoY (1/3) Delivered through optimum mix of customer retention & cross sell RURAL Rural Group Loans & Micro Finance Farm Equipment Finance Total disbursements Analytics driven dealer 61% of total disbursements relationships for higher counter
Slide 12: Retail disbursement growth of 25% YoY (2/3)
Translating to a robust Retail disbursement growth of 25% YoY (2/3) Delivered through optimum mix of customer retention & cross sell URBAN Two wheeler Finance Consumer Loans Created Consumer Loans product from 2W for 60% 40% cross sell / up sell 53% of total disbursements 2W Loyalty / Top up Total T
Slide 13: Retail disbursement growth of 25% YoY (3/3)
Translating to a robust Retail disbursement growth of 25% YoY (3/3) Delivered through optimum mix of customer segments URBAN Home Loans & LAP SME Finance 60% 75% 40% 25% Total Small Self-Employed Professionals Total Salaried Self Employed disbursements Business (e.g. Doctors, CAs) disbursements Rs 7
Slide 14: Leading to Retail book growth of 34% YoY
INTERNAL Leading to Retail book growth of 34% YoY in Rs Cr Retail Book 61,053 64,274 47,794 Q1FY23 Q4FY23 Q1FY24 Farmer Finance Rural Business Finance Urban Finance SME Finance 12,819 13,125 18,693 19,743 27,841 29,261 11,597 14,397 21,607 1,779 1,378 126 Q1FY23 Q4FY23 Q1FY24 Q1FY23 Q4FY23 Q1FY24 Q1
Slide 15: Superior collection efficiencies over time
INTERNAL While displaying superior collection efficiencies over time URBAN FINANCE RURAL BUSINESS FINANCE FY23 ~ FY24 -+-FY23 -+-FY24 ~ ~ ~ RURAL GROUP LOANS & MICRO TWO WHEELER FINANCE I 97 .6% I I 98.3% I I 97 .9% I I 99.0% I I 98.6'/o I I 98.6% I I 98. 7% I I 98.3°/o I I 98.6% I I 98.2% I I 98.1
Slide 16: Best-in-class '0 DPD' across flagship products
INTERNAL …& best-in-class ‘0 DPD’ across flagship products RURAL GROUP LOANS & FARM EQUIPMENT TWO WHEELER FINANCE MICRO FINANCE FINANCE 88.3% 96.4% 83.8% 80.7% 87.0% 80.0% Industry LTF Industry LTF Industry LTF Best-in-class 0 DPD portfolio of LTF vis-à-vis the Industry 15 Industry figures are for t
Slide 17: Pristine Retail Asset Quality (1/2)
INTERNAL … resulting in pristine Retail Asset Quality (1/2) Stagewise assets & provision summary G Q1FY23 Q4FY23 Q1FY24 R Stage wise (in Rs Cr) Q1FY23 Q4FY23 Q1FY24 (% of Total) (% of Total) (% of Total) O S S Stage 1 43,794 91.63% 57,356 93.95% 60,480 94.10% A Stage 2 2,273 4.76% 1,616 2.65% 1,731
Slide 18: Pristine Retail Asset Quality (2/2)
INTERNAL … resulting in pristine Retail Asset Quality (2/2) Retail - Asset Quality 0 75% 0 80% 079% 2,081 2,063 1 3 % 1,727 1 1 % 9 % 7 % 5 % 3.61% 3.41% 3.21% 433 421 437 3 % 0.93% 0.71% 0.70% 1 % -1 % - Q1FY23 GS3 (Rs Cr) - NS3 (Rs Cr) Q4FY23 •GS3 (%) • Q1FY24 NS3 (%) 0 PCR (%) 17 Effective Q1FY23
Slide 19: For sustainable Retail PAT & RoA
INTERNAL For sustainable Retail PAT & RoA Retail - PAT Q1FY24 ROA TREE LAKSHYA 2026 ROA TREE in Rs Cr NIMs + Fees 11.71% 11% 533 472 Opex 4.33% 4% 193 Credit cost 2.78% 3% Q1FY23 Q4FY23 Q1FY24 RoA 3.08% 2.8 - 3% 18
Slide 20: Coupled with rapid reduction in Wholesale book
Coupled with rapid reduction in Wholesale book in Rs Cr Wholesale Book* Infrastructure Finance Real Estate Finance 43,257 (29K 30,521 Cr) (21K Cr) 11,210 (7K Cr) 19,840 14,292 13,733 5,779 9,939 4,096 FY22 FY23 Q1FY24 FY22 FY23 Q1FY24 FY22 FY23 Q1FY24 19 * Includes defocused
Slide 21: Agenda
Agenda A Journey towards Lakshya 2026 Q1FY24 in Perspective Fintech@Scale Update B Annexures 20 e l&T Finance
Slide 22: App as a powerful digital channel for customer
App as a powerful digital channel for customer PLANET App Features OUR ‘PLANET’ APP FEATURES Completed In Progress (Launched in March 2022) Servicing features Engagement features Autonomous journeys View Loan D2C journey for Account Details Mandi Price Farm Top Up (Farm customer) D2C journey Downloa
Slide 23: PLANET App: Service Measurement Metrics
App as a powerful digital channel for customer PLANET App: Service Measurement Metrics upto Q1FY24 Update Rs. 360 Cr+ Rs. 3,000 Cr+ 67 Lac+ 4.3 Lac+ Collections Sourcing Servicing Experience Rural Customers ~I Geo-agnostic Sourcing ] ~I Self Servicing ] ~I Servicing channels ] .... - ••• • - - ... •
Slide 24: Developing Digital Finance Delivery as a customer value proposition
Developing Digital Finance Delivery as a customer value proposition Q1FY24 Update Digital Delivery: Touching every part of the customer ecosystem 100% 100% 97% 14% 93% Paperless Journey in Rural Group Loans, Digital eNach Digital Digital 2W Finance, Disbursements Penetration Collections Collections
Slide 25: Conclusion
Conclusion Trending well on all Lakshya 2026 goals Achieved Lakshya 2026 goal of >80% Retailisation 3 years in advance Retailisation Retail Growth Retail Asset Quality Retail RoA LAKSHYA 2026 >80% >25% CAGRx GS3 <3% 2.8% - 3% GOALS NS3 <1% Q1FY24 GS3 3.21% Q1 82% 34% YoY RETAIL NS3 0.70% 3.08% Perfo
Slide 26: Annexures
Annexures —————ESEaeae ae eee ® L&T Finance
Slide 27: Index of Annexures
Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures 26 e l&T Finance
Slide 28: A Retail franchise built over a decade
A Retail franchise built over a decade FARMER FINANCE RURAL BUSINESS FINANCE (Farmer) (Small Rural Entrepreneur) RURAL Rural Group Loans Farm Equipment Finance Micro Finance Kisan Suvidha Vishwas Loans Pragati Loans Two wheeler Finance Consumer Loan Loans to Professionals Home Loans Business Loans L
Slide 29: Backed by established sustainable differentiators
… backed by established sustainable differentiators Strong & well provided balance Amongst Top financiers in Retail Granular customer franchise & D2C App: PLANET sheet space Distribution network PCR at 71%, built macro prudential Seen multiple cycles, 2.1 Cr+ customer database, Creating an augmented
Slide 30: Helped create winning products for over a decade
Helped create winning products for over a decade in Rs Cr Rural Group Loans & Micro Finance Farm Equipment Finance Two wheeler Finance 14+ years of Vintage 18+ years of Vintage 10+ years of Vintage 65 Lac+ customers serviced in urban 1.3 Cr+ customers serviced in rural India 11 Lac+ customers servic
Slide 31: On the back of a granular distribution network
On the back of a granular distribution network 20 States I IUT 2 100+ Cities / Towns 18 States I I 1 UT ~2,00,000 Villages State Madhya Pradesh Maharashtra Urban Branches 14 19 Rural Branches 79 36 I .. Uttar Pradesh 11 87 Gujarat 13 57 •• • • •• .. .... Karnataka 10 199 I • f •• • West Bengal 12 11
Slide 32: Market dominance: Rural Group Loans and Micro Finance
Leading to market dominance through flagship products Rural Group Loans and Micro Finance - amongst the Leading Financiers Well diversified Operational Customer footprint excellence Centricity • Automated underwriting; geo-strategy • Vintage of 14+ years based on women credit penetration • LTFS excl
Slide 33: Market dominance: Farm Equipment Finance
Leading to market dominance through flagship products Farm Equipment Finance – amongst the Leading Financiers Well diversified Dealer / OEM Customer footprint Relationship Centricity • Vintage of 18+ years • Retention products (Kisan Suvidha) • 2,500+ Dealers • 170+ branches across 18 states & 1 UT
Slide 34: Market dominance: Two wheeler Finance
Leading to market dominance through flagship products Two wheeler Finance - amongst the Leading Financiers Well diversified Dealer / OEM Customer footprint Relationship Centricity • Strong New To Credit proposition (~50%) • Vintage of 10+ years • 6,500+ Dealers • Best-in-class TAT: 45 secs • 101 loc
Slide 35: Bespoke cross-sell & up-sell franchise
Thereby creating a bespoke cross-sell & up-sell franchise CUSTOMER LOAN PRODUCTS fHook product Rural Group Loans & Micro Finance 1.3 Cr+ f Hook product Farm Equipment Finance 11 Lac + f Hook product Two wheeler Finance & Home Loans / LAP 65 Lac + ( 34% of disbursements are to Repeat customers ) @))
Slide 36: Data science based digital delivery
Built on the foundation of Data science based digital delivery Building Next-Gen platform & expanding scope Deepen existing and create new analytical models through harvesting of data CL TW HL RBF Farm SME Scorecards m ~-- 'all.. Propensity Model (Sourcing / Collections) App Scorecard •• •• •• • ••
Slide 37: Leveraging data analytics across practices
Built on the foundation of Data science based digital delivery Leveraging data analytics across practices • Industry peer Benchmarking • State Fiscal Position • Soil Moisture Levels Sourcing • Market Penetration • Rainfall Distribution • Sowing pattern Analytics • Delinquency Trends • Water reservoi
Slide 38: Assisted apps & centralized underwriting
…through assisted apps & centralized underwriting In the next phase, moved to developing assisted apps for customer loan delivery ASSISTED APPS PROVIDING END-TO-END DIGITAL LOAN JOURNEYS DIGITAL INTERVENTIONS Rural Group Loans & Micro Finance Farm Equipment Finance Two wheeler Finance KYC – DigiLock
Slide 39: Best in class Customer Value Proposition
To deliver a best in class Customer Value Proposition LEVERAGING CUSTOMISED DIGITAL CAPABILITIES WITH THE INDIA STACK LEADING TO BEST IN CLASS TAT Liveness matching With OCR as KYC Digilocker, fuzzy logic & penny credit I eNACH 24 hours Industry avg: 4 days Farm Equipment API integration with channe
Slide 40: To create a Fintech@Scale
To create a Fintech@Scale Fintech@Scale blueprint Components to building a Fintech@Scale •--- 1 ■ Automated Process . . ( SFDC Workflow ~-~ /G ( ~eOoud ~Qlik(& _ ,I> Scalability v _ __ Googec~[ Google Cloud Platform ] ■ •2 ) I ~-~ ■ Business Rule , ~ Qlik & ( Qliksense portals ] ■ Engine Interactive
Slide 41: Index of Annexures
Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures 40 e l&T Finance
Slide 42: Retail Lending Business – Business wise disbursement split
INTERNAL Retail Lending Business – Business wise disbursement split Disbursement Q1FY23 Segments (Rs Cr ) Q4FY23 Q1FY24 Y-o-Y (%) Farmer Finance 1,532 Farm Equipment Finance 1,556 1,757 15% Rural Business Finance 3,168 Rural Group Loans 3,888 4,240 18% 643 Micro Finance 513 271 Urban Finance 1,517 T
Slide 43: Retail Lending Business – Business wise book split
INTERNAL Retail Lending Business – Business wise book split Book Q1FY23 Segments (Rs Cr) Q4FY23 Q1FY24 Y-o-Y (%) Farmer Finance 11,597 Farm Equipment Finance 12,819 13,125 13% Rural Business Finance Rural Group Loans & Micro 14,397 18,693 19,743 37% Finance Urban Finance 7,488 Two wheeler Finance 8,
Slide 44: Lending Business – Business wise disbursement & book split
INTERNAL Lending Business – Business wise disbursement & book split Disbursement Q1FY23 Segments (Rs Cr ) Q4FY23 Q1FY24 Y-o-Y (%) 8,938 Retail Finance 11,282 11,193 25% 121 Real Estate Finance 48 132 9% 1,402 Infrastructure Finance 980 1,040 (26%) 1,522 Wholesale Finance 1,028 1,172 (23%) 10,461 Foc
Slide 45: LTFH Consolidated – Summary financial performance
INTERNAL LTFH Consolidated – Summary financial performance Performance Summary Q1FY23 Summary P&L (Rs Cr ) Q4FY23 Q1FY24 Y-o-Y (%) 2,846 Interest Income 3,123 3,008 6% 1,413 Interest Expense 1,445 1,364 (3%) 1,433 NIM 1,679 1,644 15% 370 Fee & Other Income 347 323 (13%) 1,803 Total Income 2,026 1,96
Slide 46: LTFH Consolidated – Key ratios
INTERNAL LTFH Consolidated – Key ratios Key Ratios Q1FY23 Key Ratios Q4FY23 Q1FY24 12.99% Yield 14.20% 14.74% 6.54% Net Interest Margin 7.63% 8.06% 1.69% Fee & Other Income 1.58% 1.58% 8.23% NIM + Fee & Other Income 9.21% 9.64% 2.97% Operating Expenses 3.58% 3.81% 5.26% Earnings before credit cost 5
Slide 47: LTFH Consolidated - Asset quality
INTERNAL LTFH Consolidated - Asset quality Consolidated – Asset Quality 0 55% 0 69% 0 71% 5,000 7 % 3,832 4,000 3,559 4.74% 3,172 3,000 4.08% 4.04% 4 % 2,000 1,591 1,178 1,000 1.87% 907 1.51% 1.19% 0 1 % Q1FY23 Q4FY23 Q1FY24 - - GS3 (Rs Cr) NS3 (Rs Cr) ....... GS3 (%) NS3 (%) 0 PCR (%) 46 Effective
Slide 48: Retail Finance – Summary financial performance
INTERNAL Retail Finance – Summary financial performance Performance Summary Q1FY23 Summary P&L (Rs Cr ) Q4FY23 Q1FY24 Y-o-Y (%) 1,807 Interest Income 2,328 2,503 39% 664 Interest Expense 899 964 45% 1,143 NIM 1,428 1,540 35% 200 Fee & Other Income 294 284 42% 1,343 Total Income 1,723 1,824 36% 500 O
Slide 49: Retail Finance – Key ratios
INTERNAL Retail Finance – Key ratios Key Ratios Q1FY23 Key Ratios Q4FY23 Q1FY24 15.57% Yield 16.04% 16.08% 9.85% Net Interest Margin 9.85% 9.89% 1.72% Fee & Other Income 2.03% 1.82% 11.57% NIM + Fee & Other Income 11.87% 11.71% 4.30% Operating Expenses 4.49% 4.33% 7.27% Earnings before credit cost 7
Slide 50: Wholesale Finance – Summary financial performance
INTERNAL Wholesale Finance – Summary financial performance Performance Summary Q1FY23 Summary P&L (Rs Cr ) Q4FY23 Q1FY24 Y-o-Y (%) 1,000 Interest Income 787 500 (50%) 731 Interest Expense 576 424 (42%) 269 NIM 211 75 (72%) 89 Fee & Other Income 42 28 (69%) 358 Total Income 253 103 (71%) 109 Operatin
Slide 51: Wholesale Finance – Key ratios
INTERNAL Wholesale Finance – Key ratios Key Ratios Q1FY23 Key Ratios Q4FY23 Q1FY24 9.93% Yield 10.63% 10.51% 2.67% Net Interest Margin 2.85% 1.59% 0.88% Fee & Other Income 0.57% 0.58% 3.55% NIM + Fee & Other Income 3.42% 2.17% 1.08% Operating Expenses 1.30% 2.02% 2.47% Earnings before credit cost 2.
Slide 52: Wholesale Finance – Asset Quality
INTERNAL Wholesale Finance – Asset Quality Wholesale - Asset Quality 0 37% 0 56% 0 56% 1,825 1 3 % 1,635 1 1 % 9 % 1,157 8.38% 1,065 7 % 7.58% 724 4.69% 5 % 3.89% 3.03% 469 3.49% 3 % 1 % -1 % Q1FY23 Q4FY23 Q1FY24 - - GS3 (Rs Cr) NS3 (Rs Cr) GS3 (%) ....... NS3 (%) 0 PCR (%) 51 Effective Q1FY23, Asse
Slide 53: Index of Annexures
Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures 52 e l&T Finance
Slide 54: Astute Asset Liability Management
INTERNAL Astute Asset Liability Management DIVERSIFIED LIABILITY MIX WEIGHTED AVERAGE COST OF BORROWING (WAC) 4% 0.5% 2% 1% 8.08% 8% 3%4% Bank Loan 3% 7.50% 7.46% NCD Pvt 43% Retail NCD 53% FY21 FY22 FY23 37% CP 42% ECB 7.64% 7.54% 7.71% 7.77% 7.53% 7.47% 7.34% 7.27% 7.33% Others Q1 FY23 Q1 FY24 Q1
Slide 55: Prudent ALM - as on June 2023
Prudent ALM - as on June 2023 Structural Liquidity statement 67,298 ■ Cummulative Inflows (Rs. Cr) 45,681 ■ Cummulative Outflows (Rs. Cr) 28,525 32,345 30,997 21,741 23,006 17,909 17,339 9,258 2,624 5,930 1,552 1,868 1-7 days 8-14 days 15 days-1 month 1-2 months 2-3 months 3-6 months 6-12 months Cum
Slide 56: AAA Credit Rating for LTFH and all its subsidiaries
AAA Credit Rating for LTFH and all its subsidiaries Credit Ratings – LTFH and its subsidiaries • Long-term ratings of LTFH and all its lending subsidiaries (LTFS) have been reaffirmed ‘AAA’ (Stable Outlook) by all 4 rating agencies: Ø CRISIL: Sep’22 Ratings Update Ø CARE: Sep’22 Ø India Ratings: Apr
Slide 57: ESG : Accelerating towards Lakshya (1/2)
ESG : Accelerating towards Lakshya (1/2) Retail | Digital | Sustainable ü Release of 1st Integrated Annual Report (IAR) FY23 ü Non-financial information prepared in accordance with various standards • Global Reporting Initiative (GRI) • National Guidelines on Responsible Business Conduct (NGRBC) ~<~
Slide 58: ESG : Accelerating towards Lakshya (2/2)
ESG : Accelerating towards Lakshya (2/2) Retail | Digital | Sustainable Environment üGreen power: ~389 tCO2e of GHG emissions avoided from operations by switching to green power across 14 branches (7 new branches to green power in Q1) üRecycled Paper: 58% usage of recycled papers üEV Financing: 7,47
Slide 59: Corporate Social Responsibility
Corporate Social Responsibility Uplifting Communities Digital & Financial Inclusion Other Initiatives MoUs signed with 3 implementing agencies for Horticulture plantation under Project Prakruti extending Digital Sakhi project in 4 states (Uttar extended to additional 100+ acres of land in Tumkur Pra
Slide 60: Well experienced and diversified Board
Well experienced and diversified Board BOARD OF DIRECTORS S.N. Subrahmanyan, Non-Executive Director, Chairperson Dinanath Dubhashi, Managing Director & CEO o Current Managing Director and Chief Executive Officer of Larsen and Toubro Limited. o Over 33 years of experience across multiple domains in B
Slide 61: Management Team
INTERNAL Management Team Dinanath Dubhashi Managing Director & CEO 33 yrs exp, BNP Paribas, SBI Cap, CARE Ratings Sachinn Joshi Sudipta Roy Raju Dodti Group CFO Rupa Rege Nitsure Chief Operating Officer CE – Wholesale & SME Finance 33 yrs exp, Aditya Birla Group Chief Economist 29 yrs exp, ICICI Ban
Slide 62: Thank You
Thank You —————ESEaeae ae eee ® L&T Finance