L&T Finance Holdings July-September consolidated PAT seen down 17% on year

MUMBAI: L&T Finance Holdings Ltd is seen reporting a near 17% on-year fall in Jul-Sep consolidated net profit to 4.7 bln rupees due to higher provisions and moderation in net interest margin. Consolidated net profit is seen 15% lower on a sequential basis, according to an average of estimates of four brokerages.

Edelweiss Securities pegged the company's Jul-Sep profit at 1.1 bln rupees, down nearly 80% on year due to likely onetime mark-down of deferred tax assets to hit the bottomline.

The company will detail its earnings on Friday. Brokerage Prabhudas Lilladher expects company's profit to be less encouraging as both loans and asset quality to stay under pressure in the reporting quarter. However, other brokerages expect asset quality to remain largely steady.

As on Jun 30, the lender had reported improvement in asset quality with gross bad loans falling to 5.72% of total advances.

Net interest income for Jul-Sep is seen in a range of 16.2-17.0 bln rupees, according to the estimates of three brokerage firms. In Apr-Jun, net interest income rose to 30% on year to 13.7 bln rupees.

"We expect net interest income to grow 8% on year due to moderation in margins," said Motilal Oswal Securities.In Apr-Jun, net interest margin rose to 5.51% from 4.90% a year ago and 5.08% in the previous quarter. Brokerage firm Mot ila l O sw al Securities is expecting a slowdown in loan growth to 12% for the quarter under review.

As on Jun 30, consolidated loan book rose 16% year-onyear to 999 bln rupees. The socalled focussed book, which includes rural, housing and infrastructure finance, grew 24% to 905 bln rupees.

Rural and housing finance segments are likely to aid loan growth, Motilal Oswal said.

"With strong parentage, L& T Finance Holdings has been able to raise adequate capital at competitive rates, which has helped it manages disbursements," said Motilal Oswal Securities in a pre-earnings report.