L&t Finance Ltd · NSE:LTF
L&t Finance — Q3 FY2024 Earnings Presentation
63 slides from L&t Finance's earnings presentation, Jan 23, 2024
Slide 1: Submission of investor / analyst presentation
(8 L&T Finance January 23, 2024 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&TF
Slide 2: Strategy & Results Update – Q3FY24
Strategy & Results Update – Q3FY24 {fiJ L&T Finance 1
Slide 3: Disclaimer
INTERNAL Disclaimer L&T Finance Holdings Limited (the “Company”) offers a range of financial products and services under the L&T Finance (LTF) brand. The information in this presentation is provided by the Company for information purposes only. This presentation or any information herein may not be
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: Agenda
INTERNAL Agenda A Journey towards Lakshya 2026 Lakshya 2026 Update Q3FY24 in Perspective Fintech@Scale Update B Annexures 4 e l&T Finance
Slide 6: Lakshya 2026 Goals - Achieved 2 years in advance
INTERNAL Lakshya 2026 Goals - Achieved 2 years in advance Retail Asset Retailisation Retail Growth Retail RoA Quality GS3 <3% >80% >25% CAGR 2.8% - 3% NS3 <1% ✓ ✓ ✓ ✓ 5 ✓ Achieved
Slide 7: L&T Finance Holdings transitions into a Retail NBFC
INTERNAL L&T Finance Holdings transitions into a Retail NBFC Retail NBFC Lakshya Goals Merger Completed Achieved With achievement of Lakshya goals & merger • L&T Finance & L&T Infra Credit LTFH becomes a Retail NBFC straddling the • Retailisation @ 91% merged with hold co – Rural & Urban ecosystem •
Slide 8: Going forward…
INTERNAL Going forward… CONVERGENCE OF GOALS AT CONSOL LEVEL BY FY2026 Consol Consol Retailisation Retail Growth Asset Quality RoA GS3 <3% >95% >25% CAGR 2.8% - 3% NS3 <1% THROUGH CYCLE ACHIEVEMENT OF THESE GOALS WILL MAKE PERFORMANCE AT L&T FINANCE CONSISTENT, PREDICTABLE & SUSTAINABLE 7
Slide 9: 5 Pillars to creating a sustainable & predictable Retail franchise
INTERNAL 5 Pillars to creating a sustainable & predictable Retail franchise .,. ••·ere Enhancing Sharpening Implementing Heightened Capability Customer Acquisition Credit Underwriting Futuristic Digital Architecture Brand Visibility Building • 0 1 Broadening customer funnel • 0 2 Building a self-lea
Slide 10: Why are we confident of achieving convergence of goals at Consol level?
INTERNAL Why are we confident of achieving convergence of goals at Consol level? CONSOL ROA +87 bps 2.8% - 3% 2.42% 2.53% 2.13% 1.90% 1.55% 1.66% 1.33% 1.02% Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24 Q3FY24 FY26 L +11 bps J Post delivery of Consol RoA of 2.53% in Q3FY24, focus would be on rea
Slide 11: Agenda
INTERNAL Agenda A Journey towards Lakshya 2026 Lakshya 2026 Update Q3FY24 in Perspective Fintech@Scale Update B Annexures 10 e l&T Finance
Slide 12: L&T Finance – ~Rs 75,000 Cr Retail digital franchise built over 15 years
INTERNAL L&T Finance – ~Rs 75,000 Cr Retail digital franchise built over 15 years STRADDLING THE RURAL & URBAN ECOSYSTEM RURAL : ~Rs 37,000 Cr Book URBAN : ~Rs 37,000 Cr Book 1,700+ Branches 150+ Branches Pan-India ~2,00,000 Villages Geo presence 100+ Cities / Towns ~20,000 employees 6,000+ employee
Slide 13: Delivering a sustained Retail disbursement growth of 25% YoY (1/4)
INTERNAL Delivering a sustained Retail disbursement growth of 25% YoY (1/4) Pivoted to highest ever quarterly disbursements of Rs. 14,531 Cr with growth across all segments in Rs Cr Retail Disbursements +25% YoY 13,499 14,531 11,607 Q3FY23 Q2FY24 Q3FY24 +8% QoQ Rural Business Finance Farmer Finance
Slide 14: Delivering a sustained Retail disbursement growth of 25% YoY (2/4)
INTERNAL Delivering a sustained Retail disbursement growth of 25% YoY (2/4) Through optimum mix of customer retention & cross sell RURAL Rural Group Loans & Micro Finance (JLG) Farm Equipment Finance Total disbursements Analytics driven dealer relationships for higher counter share 70% of 29% of tot
Slide 15: Delivering a sustained Retail disbursement growth of 25% YoY (3/4)
INTERNAL Delivering a sustained Retail disbursement growth of 25% YoY (3/4) Through optimum mix of customer retention & cross sell URBAN Two wheeler Finance Personal Loans Created Personal Loans product from 2W for 66% 34% cross sell / up sell 50% of total disbursements 2W Loyalty / Top up Total Tot
Slide 16: Delivering a sustained Retail disbursement growth of 25% YoY (4/4)
INTERNAL Delivering a sustained Retail disbursement growth of 25% YoY (4/4) Through optimum mix of customer focused products URBAN Home Loans & LAP SME Finance 76% 24% 53% 47% Total Total Home Loans LAP Term Loan Overdraft facility disbursements disbursements Rs 1,512 Cr Rs 487 Cr Rs 1,998 Cr Rs 508
Slide 17: Leading to Retail book growth of 31% YoY
INTERNAL Leading to Retail book growth of 31% YoY in Rs Cr Retail Book +31% YoY 69,417 74,759 57,000 Q3FY23 Q2FY24 Q3FY24 +8% QoQ Rural Business Finance Farmer Finance Urban Finance SME Finance 31,253 33,529 21,672 23,110 25,947 17,485 12,447 13,351 13,845 2,413 3,078 838 Q3FY23 Q2FY24 Q3FY24 Q3FY23
Slide 18: While displaying superior collection efficiencies over time
INTERNAL While displaying superior collection efficiencies over time RURAL BUSINESS FINANCE URBAN FINANCE FY23 ~ FY24 RURAL GROUP LOANS & ~ FY23 ~ FY24 MICRO FINANCE (JLG) 199.8% 1 199.8% 1 199.8% 1 199.9% 1 199.8% 1 199.8% 1 199.8% 1 199.8% 1 199.8% 1 I98.o¾ 1 I98.8% 1 198.1•1. 1 TWO WHEELER 198.3%
Slide 19: …& 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 (JLG) FINANCE 88.9% 97.1% 83.0% 80.3% 87.2% 78.6% Industry LTF Industry LTF Industry LTF Best-in-class 0 DPD portfolio of LTF vis-à-vis the Industry 18 Industry figures are
Slide 20: … resulting in pristine Retail Asset Quality (1/2)
INTERNAL … resulting in pristine Retail Asset Quality (1/2) Stagewise assets & provision summary G Q3FY23 Q2FY24 Q3FY24 R Stage wise (in Rs Cr) Q3FY23 Q2FY24 Q3FY24 (% of Total) (% of Total) (% of Total) O S S Stage 1 53,382 93.65% 65,433 94.26% 70,591 94.42% A Stage 2 1,642 2.88% 1,868 2.69% 1,963
Slide 21: … resulting in pristine Retail Asset Quality (2/2)
INTERNAL … resulting in pristine Retail Asset Quality (2/2) Retail - Asset Quality 0 79% 0 79% 079% 2,116 2,206 1 3 % 1,976 1 1 % 9 % 7 % 5 % 3.47% 3.05% 2.95% 407 452 466 3 % 0.73% 0.67% 0.64% 1 % -1 % - Q3FY23 GS3 (Rs Cr) - NS3 (Rs Cr) Q2FY24 •GS3 (%) • Q3FY24 NS3 (%) 0 PCR (%) 20 Asset Quality nu
Slide 22: Agenda
INTERNAL Agenda A Journey towards Lakshya 2026 Lakshya 2026 Update Q3FY24 in Perspective Fintech@Scale Update B Annexures 21 e l&T Finance
Slide 23: App as a powerful digital channel for customer
INTERNAL 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 Account Mandi Price Details & update Profile (Farm customer) Rewards & Download SO
Slide 24: App as a powerful digital channel for customer (1/2)
INTERNAL App as a powerful digital channel for customer (1/2) PLANET App: Service Measurement Metrics upto Q3FY24 Update Rs. 800 Cr+ Rs. 4,600 Cr+ 130 Lac+ 9 Lac+ Collections Sourcing Servicing Experience Rural Customers Rs in Cr Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 SOURCING -- 12
Slide 25: App as a powerful digital channel for customer (2/2)
INTERNAL App as a powerful digital channel for customer (2/2) PLANET App: Service Measurement Metrics upto Q3FY24 Update Count in lacs Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q1 FY24 Q2 FY24 Q3 FY24 SERVICING RESOLUTION 1.5 7.4 14.4 18.6 21.5 26.0 41.4 Mainly includes: SOA Downloads 0.9 4.3 7.5 9.3 8.9 9.4
Slide 26: Developing Digital Finance Delivery as a customer value proposition
INTERNAL Developing Digital Finance Delivery as a customer value proposition Q3FY24 Update Digital Delivery: Touching every part of the customer ecosystem 100% 100% 95% 19% 94% Paperless Journey in Rural Group Loans, Digital eNach Digital Digital 2W Finance, Disbursements Penetration Collections Col
Slide 27: Summing up Q3FY24 - Achieved Lakshya 2026 goals
INTERNAL Summing up Q3FY24 - Achieved Lakshya 2026 goals Retailisation Retail Growth Retail Asset Quality Retail RoA LAKSHYA 2026 GS3 <3% >80% >25% CAGR 2.8% - 3% GOALS NS3 <1% ✓ ✓ x ✓ ✓ Lakshya 2026 goals achieved 2 years in advance Merger Update Completed merger of L&T Finance Ltd & L&T Infra Cred
Slide 28: Annexures
INTERNAL Annexures 27 e l&T Finance
Slide 29: Index of Annexures
INTERNAL Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures 28 e l&T Finance
Slide 30: A Retail franchise built over a decade
INTERNAL A Retail franchise built over a decade FARMER FINANCE RURAL BUSINESS FINANCE (Farmer) (Small Rural Entrepreneur) RURAL Rural Group Loans (JLG) Farm Equipment Finance Micro Finance (JLG) Kisan Suvidha Vishwas Loans Agri-allied Pragati Loans Micro LAP Two wheeler Finance Personal Loan Loans t
Slide 31: … backed by established sustainable differentiators
INTERNAL … backed by established sustainable differentiators Strong & well provided balance Amongst Top financiers in Retail Granular customer franchise & D2C App: PLANET sheet space Distribution network Consol PCR at 75%, built macro Seen multiple cycles, 2.2 Cr+ customer database, Creating an augm
Slide 32: Helped create market leadership in fulcrum products over a decade
INTERNAL Helped create market leadership in fulcrum products over a decade in Rs Cr Rural Group Loans & Micro Finance (JLG) Farm Equipment Finance Two wheeler Finance 14+ years of Vintage 18+ years of Vintage 10+ years of Vintage ~1.4 Cr customers serviced in rural India 11 Lac+ customers serviced i
Slide 33: On the back of a granular distribution network
INTERNAL On the back of a granular distribution network 18 States I I 1 UT ~2,00,000 Villages 20 States I I 2 UT 100+ Cities / Towns State Madhya Pradesh Maharashtra Rural Branches 93 30 Urban Branches 14 19 .. Uttar Pradesh 89 11 Gujarat 62 13 Karnataka 200 10 •• • .... • I• • West Bengal 116 12 ••
Slide 34: Leading to market dominance through fulcrum products
INTERNAL Leading to market dominance through fulcrum products Rural Group Loans and Micro Finance (JLG) - amongst the Leading Financiers Well diversified Operational Customer footprint excellence Centricity • Automated underwriting; geo-strategy • Vintage of 14+ years based on women credit penetrati
Slide 35: Leading to market dominance through fulcrum products
INTERNAL Leading to market dominance through fulcrum products Farm Equipment Finance – amongst the Leading Financiers Well diversified Dealer / OEM Customer footprint Relationship Centricity • Vintage of 18+ years • Retention products (Kisan Suvidha) • 3,000+ Dealers • 170+ branches across 18 states
Slide 36: Leading to market dominance through fulcrum products
INTERNAL Leading to market dominance through fulcrum products Two wheeler Finance - amongst the Leading Financiers Well diversified Dealer / OEM Customer footprint Relationship Centricity • Straddle continuum from New To Credit to Prime • Vintage of 10+ years • 6,500+ Dealers customers • 107 locatio
Slide 37: Thereby creating a efficient cross-sell & up-sell franchise
INTERNAL Thereby creating a efficient cross-sell & up-sell franchise CUSTOMER LOAN 33% of Rural Group Loans & Farm Equipment Two wheeler Finance disbursements are to PRODUCTS Hook Hook Hook product Micro Finance product Finance product & Home Loans / LAP Repeat customers ~1.4 Cr 11 Lac + 70 Lac + Pr
Slide 38: Built on the foundation of Data science based digital delivery
INTERNAL 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 PL TW HL RBF Farm SME Scorecards m ... , ..,::; , Propensity Model (Sourcing / Collection) App Scorecard ••
Slide 39: Built on the foundation of Data science based digital delivery
INTERNAL 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
Slide 40: …through assisted apps & centralized underwriting
INTERNAL …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 KYC – DigiLocker / Account Aggregator – Rural Group Loans & Micro Finance Farm Equ
Slide 41: To deliver a best in class Customer Value Proposition
INTERNAL 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 Digilocker, fuzzy logic & penny With OCR as KYC credit Video KYC 24 hours Industry avg: 4 days Farm Account Aggregator – custo
Slide 42: To create a Fintech@Scale
INTERNAL 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 _ __ •2 ■ ~-~ Google Cloud Googec~ [ Platform ] I ~-~ ■ Business Rule ) , ~-~ Engine I ~ Qlik & ( Qliksense portals
Slide 43: Index of Annexures
INTERNAL Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures 42 e l&T Finance
Slide 44: Lending Business – Business wise disbursement split
INTERNAL Lending Business – Business wise disbursement split Disbursement Q3FY23 Particulars (Rs Cr ) Q2FY24 Q3FY24 Y-o-Y (%) Farmer Finance 2,057 Farm Equipment Finance 1,534 2,027 (1%) Rural Business Finance 3,624 Rural Group Loans (JLG) 5,499 5,331 28% 657 Micro Finance (JLG) 242 144 Urban Financ
Slide 45: Lending Business – Business wise book split
INTERNAL Lending Business – Business wise book split Book Q3FY23 Particulars (Rs Cr) Q2FY24 Q3FY24 Y-o-Y (%) Farmer Finance 12,447 Farm Equipment Finance 13,351 13,845 11% Rural Business Finance Rural Group Loans & Micro Finance 17,485 21,672 23,110 32% (JLG) Urban Finance 8,716 Two wheeler Finance
Slide 46: LTFH Consolidated – Summary financial performance
INTERNAL LTFH Consolidated – Summary financial performance Performance Summary ------- ----- 1,501 Interest Expense 1,325 1,353 1 (10%) -- ---- ------------------------ ---- - r ---- 80/o-- 1,693 NIM 1,729 1,833 318 Fee & Other Income 446 399 l[L ------- 26%__ 2,011 Total Income 2,1 75 2,232 11% ---
Slide 47: LTFH Consolidated – Key ratios
INTERNAL LTFH Consolidated – Key ratios Key Ratios Q3FY23 Key Ratios Q2FY24 Q3FY24 13.98% Yield 15.23% 15.60% 7.41% Net Interest Margin 8.62% 8.97% 1.39% Fee & Other Income 2.22% 1.95% 8.80% NIM + Fee & Other Income 10.84% 10.93% 3.37% Operating Expenses 4.29% 4.37% 5.44% Earnings before credit cost
Slide 48: LTFH Consolidated - Asset quality
INTERNAL LTFH Consolidated - Asset quality Consolidated – Asset Quality 0 60% 0 76% 0 75% 5,000 3,723 6 % 4,000 4.21% 3,000 2,575 3.27% 2,626 3.21% 2,000 3 % 1,487 1.72% 1,000 0.82% 627 0.81% 648 0 0 % Q3FY23 Q2FY24 Q3FY24 - - GS3 (Rs Cr) NS3 (Rs Cr) GS3 (%) - NS3 (%) 0 PCR (%) 47 Asset Quality numb
Slide 49: Index of Annexures
INTERNAL Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures Asset Liability Management Sustainability (ESG & CSR) Board and Senior Management 48 e l&T Finance
Slide 50: Astute Asset Liability Management
INTERNAL Astute Asset Liability Management OUTPERFORMING IN TIMES OF RISING INTEREST RATE ENVIRONMENT DIVERSIFIED LIABILITY MIX WEIGHTED AVERAGE COST OF BORROWING (WAC) 2% 5% 2% 8.08% 2% 3% Bank Loan - Non-PSL 2% 7% Bank Loan - PSL 7.50% 7.46% 28% 27% FI Loan NCD Private 36% FY21 FY22 FY23 40% 13% R
Slide 51: Prudent ALM - as on December 2023
INTERNAL Prudent ALM - as on December 2023 Structural Liquidity statement 61,754 ■ Cummulative Inflows (Rs. Cr) 40,373 ■ Cummulative Outflows (Rs. Cr) 32,380 28,097 22,615 19,888 18,146 12,640 13,706 11,400 5,280 6,726 2,774 2,904 1-7 days 8-14 days 15 days-1 month 1-2 months 2-3 months 3-6 months 6
Slide 52: AAA Credit Rating for LTFH
INTERNAL AAA Credit Rating for LTFH Credit Ratings - LTFH • Rating Agencies reviewed the ratings of LTFH post merger and reaffirmed the ratings of LTFH at ‘AAA (Stable) / A1+’: Rating Agency Long-term / Short-term Rating of LTFH Ratings CRISIL Ratings CRISIL AAA (Stable) / CRISIL A1+ Update ICRA ICR
Slide 53: Index of Annexures
INTERNAL Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures Asset Liability Management Sustainability (ESG & CSR) Board and Senior Management 52 e l&T Finance
Slide 54: L&T Finance – Businesses aligned with Sustainability goals
INTERNAL L&T Finance – Businesses aligned with Sustainability goals RURAL : ~Rs 37,000 Cr Book Business deeply intertwined with ESG SDG Linkage 1,700+ Branches Penetrating underserved Pan-India Reach Active customers across ~2,00,000 Villages geographies Geo presence ~20,000 employees hired from Rur
Slide 55: ESG : Accelerating towards Lakshya (1/4)
INTERNAL ESG : Accelerating towards Lakshya (1/4) Retail | Digital | Sustainable Environment ~1,306 tCO2e emission avoided by switching to green power across L&T Finance Zero Waste to Landfill (corporate office) – External certified vendor empaneled for branches disposal of 3,460 kgs of waste (2,525
Slide 56: ESG : Accelerating towards Lakshya (2/4)
INTERNAL ESG : Accelerating towards Lakshya (2/4) Retail | Digital | Sustainable Social • Launch of inaugural ‘Sustainable Finance Framework’ leveraging benefits of financial instruments Market l~telligence & Analytics CRISIL and sustainability Sustainable Finance • Framework independently reviewed
Slide 57: ESG : Accelerating towards Lakshya (3/4)
INTERNAL ESG : Accelerating towards Lakshya (3/4) Retail | Digital | Sustainable Governance ESG Ratings Enhanced transparency and strengthened governance by creating “One Single Lending Entity” B ~CDP Significant improvement from D to B Recognition as “Active Participation as Corporate Issuer on NSE
Slide 58: ESG : Accelerating towards Lakshya (4/4)
INTERNAL ESG : Accelerating towards Lakshya (4/4) Retail | Digital | Sustainable Awards Champions of ESG Award at Global Fintech Mahatma Award for ESG Excellence UBS Forums Award under Sustainable Fest 2023 Sept’23 Organisation Award Sept’23 "U FAME Presented to L&T Finance umbai . M u h tua&bt. old
Slide 59: Corporate Social Responsibility
INTERNAL Corporate Social Responsibility Transforming Lives, Sustaining Progress • 9,00,000+ community members outreached under digital Sakhi project in Karnataka, Kerala, West Bengal, Odisha, Tamil Nadu, Uttar Pradesh and Bihar. • Enabled 1,00,000+ community members to access and avail benefits of
Slide 60: Index of Annexures
INTERNAL Index of Annexures I Our dominant Retail Franchise built over a decade II Financials III Other Annexures Asset Liability Management Sustainability (ESG & CSR) Board and Senior Management 59 e l&T Finance
Slide 61: Well experienced and diversified Board
INTERNAL Well experienced and diversified Board BOARD OF DIRECTORS S.N. Subrahmanyan, Non-Executive Director, Chairperson Sudipta Roy, Managing Director & CEO o Current Chairman & Managing Director of Larsen and Toubro Limited. o Over 27 years of experience across multiple domains in BFSI such as o
Slide 62: Management Team
INTERNAL Management Team Sudipta Roy Managing Director & CEO 27 yrs exp, ICICI Bank, Citibank, Deutsche Bank Sachinn Joshi Raju Dodti CFO Rupa Rege Nitsure Santosh Parab CE – Wholesale & SME Finance 33 yrs exp, Aditya Birla Chief Economist General Counsel 25 yrs exp, IDFC, Rabo, ABN Amro, Financial
Slide 63: Thank You
INTERNAL Thank You 62 e l&T Finance
L&T Finance Holdings — Q3 FY2024 Earnings Presentation on 6ix