On Wednesday, Citi reaffirmed its Buy rating on L&T Financial Holdings (LTFH:IN) with a steady price target of INR 221.00. The endorsement followed a corporate event in Hong Kong where key executives from L&T Financial Holdings discussed various facets of the company's operations and strategies.
The company's management, including the Managing Director & CEO and the Chief Financial Officer, engaged in discussions about the microfinance institution (MFI) portfolio, personal loans, and home loans performance, as well as the measures taken to strengthen the credit funnel. They also provided insights into the customer profile nuances.
L&T Financial Holdings' executives expressed confidence that industry-wide stress related to MFIs would likely ease by the second half of the fiscal year 2025. They highlighted that the risk of overleveraging among their MFI borrowers was under control, with a significant portion of their clients not engaged with multiple lending institutions.
The company is taking steps to reduce disbursements to over-leveraged or overdue borrowers and is working on mitigating concentration risk. Additionally, the impact of initiatives in home loan lead generation is expected to become evident in the upcoming quarters.
L&T Financial Holdings remains comfortable with their credit cost guidance, which is projected to be between 2.25% and 2.5%. Citi has an open 90-day calendar week on L&T Financial Holdings and upholds its Buy recommendation.
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