L&T Finance shares surge 4.6% to hit 52-week high; here’s why

Shares of L&T Finance Ltd surged around 5% in the early morning trade today to ₹179 after reports of a block deal by two major investors. The movement in the share price comes in the wake of unconfirmed reports saying that private equity major Bain Capital via its affiliates BC Asia Investment VI and BC Asia Growth Investment and BNP Paribas Financial SNS were planning to sell a 3.54% stake in the company at ₹169.17 apiece.

At 9.40 AM, shares of the investment company of the manufacturing and engineering giant L&T Ltd opened a gap up at ₹175 on the BSE and hit a 52-week high of ₹179, up 4.6% compared to the previous day’s close.

At the current share price, the company's m-cap stands at ₹43,983.01 crore. Share of L&T Finance has underperformed in the past year, gaining just 5.09%. The scrip has gained 12.22% in the past month and 10.30% in the past week.

If the reports are true, the block deal will pave the way for Bain and BNP to exit the company. Last year, too, Bain sold 2.82% shares in the company for ₹900 crore.

For the financial year 2023-24, L&T Finance recorded an all-time high annual profit after tax (PAT) of ₹2,320 crore, up 43% year-on-year (YoY) and ₹554 crore quarterly profit in Q4 FY24, up 11% YoY.

The company's net interest income (NII) for FY24 stood at ₹7,115 crore against ₹6,368 crore, up 12% YoY, while the NII in Q4 FY24 was at ₹1,909 crore, up 14% YoY.

The NIM including fees and other income for the fiscal year was 10.67% vs 8.67%, up 200 bps YoY, while in Q4, it was 11.25%, up from 9.21% in the year-ago period.

At the end of FY24, L&T Finance claimed to have a strong retail franchise, with a retail book size of ₹80,037 crore. The company also says its disbursements were at an all-time high in Q4 FY24, which exceeded disbursements in the festive Q3 FY24 quarter. The company's board had also recommended a dividend of ₹2.50 per equity share for FY24.

In its outlook for FY25, L&T Finance says following an increase in risk weights by the RBI, costs of funds for NBFCs from banks have increased and are likely to remain elevated in FY25. "The incremental funding requirement for the NBFC sector will be ₹4.5 Tn in FY25 and the volume of public NCDs might go up in FY25," L&T Financial said via its annual report.