L&T FINANCE HOLDINGS 2022-23 Annual Report Analysis

Thu, 6 Jul

L&T FINANCE HOLDINGS has announced its results for the year ended March 2023. Let us have a look at the detailed performance review of the company during the year 2022-23.

L&T FINANCE HOLDINGS Income Statement Analysis

• Interest income during the year rose 7.1% on a year-on-year (YoY) basis.
• Interest expenses were up by 0.8% YoY during the same period.
• Operating expenses declined by 11.8% YoY during the year.
• The company's net interest income (NII) increased by 12.9% YoY during the fiscal. Consequently, net interest margins (NIM) witnessed a growth and stood at 7.7% in FY23 as against 6.5% in FY22.
• Other income declined by 22.2% YoY during the year.
• Net profit for the year declined by 173.8% YoY.
• Net profit margins during the year declined to -5.0% in FY23 from 7.3% in FY22.

L&T FINANCE HOLDINGS Income Statement – 2022-23

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Interest Income	Rs m	119,297	127,750	7.1%
Other Income	Rs m	43,408	33,759	-22.2%
Interest Expense	Rs m	57,734	58,222	0.8%
Net Interest Income	Rs m	61,563	69,527	12.9%
Operating Expense	Rs m	91,716	80,867	-11.8%
Pre-provision Operating Profit	Rs m	13,255	22,419	69.1%
Provisions & Contingencies	Rs m	264	209	-20.8%
Profit before tax	Rs m	12,229	-5,565	-145.5%
Tax	Rs m	3,736	1,724	-53.9%
Profit after tax	Rs m	8,701	-6,421	-173.8%
Minority Interest	Rs m	209	868	315.8%
Net Interest Margin	%	6.5	7.7
Net profit margin	%	7.3	-5.0

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L&T FINANCE HOLDINGS Balance Sheet Analysis

• The company's deposits during FY23 stood at Rs 0 m as compared to Rs 0 m in FY22, thereby witnessing an increase of 0.0%.
• Advances for the year stood at Rs 751.5 bn as compared to Rs 824.7 bn during FY22, a fall of 8.9%.
• Cost of deposits for L&T FINANCE HOLDINGS rose 0.0% and stood at 0.0%, while yield on advances rose to 0.0%.
• The lender's investments rose to Rs 152.3 bn during the year from Rs 127.8 bn in FY22.
• Borrowing stood at Rs 252.5 bn, a fall of 6.2% as compared to previous year.
• Overall, the total assets and liabilities for FY23 stood at Rs 1,045.0 bn as against Rs 1,054.6 bn during FY22, thereby witnessing a fall of 0.9%.

L&T FINANCE HOLDINGS Balance Sheet – as on March 2023

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*	% Change
Networth	Rs m	197,650	213,873	8.2%
Advances	Rs m	824,694	751,546	-8.9%
Deposits	Rs m	0	0	0.0%
Yield on advances	%	0.0	0.0
Cost of Deposits	%	0.0	0.0
Investments	Rs m	127,821	152,282	19.1%
Borrowings	Rs m	269,152	252,490	-6.2%
Total Assets	Rs m	1,054,576	1,045,011	-0.9%

Current Valuations for L&T FINANCE HOLDINGS

• The trailing twelve-month earnings per share (EPS) of the company stands at Rs -2.6, an improvement from the EPS of Rs 3.5 recorded last year.
• The price to earnings (P/E) ratio, at the current price of Rs 131.5, stands at -31.7 times its trailing twelve months earnings.
• The price to adjusted book value (P/ABV) ratio at current price levels stands at 1.5 times, while the price to income ratio stands at 1.6 times.

Per Share Data/Valuations

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Income per share (Unadj.)	Rs	48.2	51.5
Earnings per share (Unadj.)	Rs	3.5	-2.6
Diluted earnings per share	Rs	3.5	-2.6
Avg P/E ratio	Rs	22.7	-31.7
Avg P/ABV ratio	Rs	0.9	1.5
Avg Market Cap	Rs	197,428	203,643
Dividends per share (Unadj.)	Rs	0.50	2.00

Ratio Analysis for L&T FINANCE HOLDINGS

• Efficiency Ratios

  Credit/Deposit Ratio: The company's credit/deposit ratio deteriorated and stood at 75,154,550.0x during FY23, from 82,469,440.0x during FY22. The credit/deposit ratio tells us how much money a company has raised in the form of deposits and has deployed as loans.

  Debt to Equity Ratio: The company's debt to equity ratio decreased and stood at 1.18x during FY23, from 1.36x during FY22. The debt to equity ratio of a company tells us how much debt a company uses relative to its equity.

• Liquidity Ratios

  Capital Adequacy Ratio (CAR): L&T FINANCE HOLDINGS's capital adequacy ratio (CAR) was at 24.5% as on 31 March 2023 as compared to 22.9% a year ago. This ratio helps measure the financial strength of the company or any finance company to meet their obligations using their assets and capital.

  A company that has a good CAR has enough capital to absorb potential losses. Thus, it has less risk of becoming insolvent and losing depositor's money.

  Provision Coverage Ratio (PCR): Apart from CAR, you also need to take a look at the company's PCR and LCR ratios. Provisioning coverage ratio (PCR) is the percentage of funds that a company sets aside for covering losses due to bad debts.

  So a high PCR ratio means asset quality issues are under control and the company is not vulnerable.

  Liquidity Coverage Ratio (LCR): The LCR is designed to ensure that companies hold a sufficient reserve of high-quality liquid assets to allow them to survive a period of significant liquidity stress lasting 30 calendar days.

• Profitability Ratios

  Return on Equity (ROE): The return on equity (ROE) ratio for the company deteriorated and stood at -3.0% during FY23, from 4.4% during FY22. The ROE measures the ability of a firm to generate profits from its shareholders capital in the company.

  Return on Assets (ROA): The return on asset (ROA) ratio of the company deteriorated and stood at -0.61% during FY23, from 0.83% during FY22. The ROA measures how efficiently the company uses its assets to generate earnings.

  Return on Capital Employed (ROCE): The ROCE for the company deteriorated and stood at 5.02% during FY23, from 6.59% during FY22. The ROCE measures the ability of a company to generate profits from its total capital (shareholder capital plus debt capital) employed in the company.

• NPA Ratios

  Gross NPA Ratio: The gross NPA ratio is the ratio of a company's gross NPAs to gross advances. L&T FINANCE HOLDINGS's gross NPA ratio stood at 0.0% as of 31 March 2023 compared to 0.0% in the same period a year ago.

  A high gross NPA ratio is a bad thing as it indicates how much of a company's loans are in danger of not being repaid.

  Net NPA Ratio: In simple language, net NPAs are simply the total non-performing assets minus the provision left aside. It gives you the exact value of NPAs after the company has made provisions.

  The net NPA ratio of L&T FINANCE HOLDINGS was 0.0% in financial year 2023. This compared with 0.0% a year ago.

Key Ratio Analysis

No. of Mths Year Ending		12 Mar-22*	12 Mar-23*
Credit/Deposit Ratio	x	82,469,440.0	75,154,550.0
Debt to Equity Ratio	x	1.4	1.2
Loans / Deposits	x	0.0	0.0
Capital Adequacy Ratio	%	22.9	24.5
Return on Equity	%	4.4	-3.0
Return on Assets	%	0.8	-0.6
Return on Capital Employed	%	6.6	5.0
% of Gross NPAs	%	0.0	0.0
% of Net NPAs	%	0.0	0.0
Yield on Advances	x	0.0	0.0
Yield on Investments	x	0.0	0.0

To see how L&T FINANCE HOLDINGS has performed over the last 5 years, please visit here.

L&T FINANCE HOLDINGS Share Price Performance

Over the last one year, L&T FINANCE HOLDINGS share price has moved up from Rs 69.7 to Rs 131.5, registering a gain of Rs 61.8 or around 88.7%.

Overall, the S&P BSE SENSEX is up 22.9% over the year.

(To know more, you can check out historical annual results for L&T FINANCE HOLDINGS here and quarterly results for L&T FINANCE HOLDINGS here)