L&T Finance Q2FY26 – When the NBFC Finally Got Its Mojo Back (And a Gold Loan Branch to Flex)
1. At a Glance
If Excel sheets could dance, L&T Finance’s Q2FY26 numbers would be doing a thumka. The company reported a ₹735 crore quarterly PAT — its highest ever — while retail assets soared past ₹1.04 lakh crore. Market cap now chilling at around ₹66,994 crore, stock cruising at ₹268 (up 25% in 3 months, and 70% in a year). P/E stands at 24.8 — not cheap, not insane, just “mainstream NBFC vibes.” ROA at 2.44% and ROE at 10.8% are looking more muscular than your gym partner post-Diwali sweets.
The real twist? This ex-wholesale junkie has gone full retail: 97% of AUM now comes from mango-people loans. From two-wheelers to microfinance, and now gold loans (courtesy the ₹1,350 crore Paul Merchants acquisition), L&T Finance wants to be your friendly neighbourhood NBFC with a fintech brain and a rural heart.
But will this new retail avatar keep compounding or end up another “Lakshya 2026 PowerPoint fantasy”? Buckle up, auditor sahab — this balance sheet has more stories than a Delhi airport lounge.
2. Introduction
Remember when L&T Finance used to be that confused cousin of the L&T family — neither a bank, nor a fintech, nor a classic NBFC? Well, looks like someone finally gave them a makeover and a decent haircut.
In the past, the company looked like it couldn’t decide whether to lend to fancy corporates or farmers buying tractors. Now, after years of identity crisis, it’s decided — “Retail hai toh real hai.”
This shift didn’t happen overnight. After the 2018 NBFC crisis, management had to detox from the “wholesale lending addiction.” They went on a long retail rehab program called Lakshya 2026, promising to hit 95% retailization, 3% GNPA, and a 2.8% ROA. Two years later, they’ve mostly pulled it off — 97% retail AUM, GNPA at 3.3%, and ROA touching 2.4%. Not bad for a company once mocked as “L&T Finance (Lag & Trouble).”
Now they’ve added a gold loan business, tied up with Google Pay and PhonePe, and even got S&P to bump their rating to BBB/Stable. Basically, this NBFC has gone from “please notice me” to “please regulate me less, RBI ji.”
But does this transformation make them India’s next Bajaj Finance or just the class monitor who caught up before exams? Let’s find out.
3. Business Model – WTF Do They Even Do?
In one line — L&T Finance lends money to almost every Indian with a pulse and a PAN card.
Their business is now split into Urban Finance (56%) and Rural Finance (44%).
Urban Finance is your standard city buffet:
2W Finance – Small ticket loans for scooters and bikes, averaging ₹1 lakh each. FY25 disbursals: ₹9,285 crore. Basically, financing that Hero Splendor your uncle still loves.
Home Loans & LAP – ₹9,582 crore disbursed, doubled its builder channel volumes, and even tied up with PhonePe. Because apparently, UPI is now a home loan lead generator.
Personal Loans – ₹6,096 crore disbursed via DSAs and digital partners. L&T’s version of the “instant approval” dream.
SME Finance – ₹5,000 crore lent to 35,000 small businesses. Some profitable, some probably selling momo near metro stations.
Rural Finance, on the other hand, is where the action truly is:
Rural Business Finance (Microfinance + Micro LAP) – ₹20,472 crore disbursed. Millions of rural women repaying faster than some startup founders.
In short: if you’re urban, they’ll give you money through an app; if you’re rural, they’ll show up at your village meeting centre.
Their AI engine Project Cyclops 2.0 now underwrites loans faster than a CA clearing tax returns on March 31. And a new initiative, Project Nostradamus, plans to predict credit risk using macro data and “alternate sources.” Basically, a financial astrologer built in Python.
4. Financials Overview
Metric
Latest Qtr (Sep’25)
YoY Qtr (Sep’24)
Prev Qtr (Jun’25)
YoY %
QoQ %
Revenue
4,336
4,019
4,260
7.87%
1.78%
EBITDA
2,674
2,444
2,620
9.4%
2.1%
PAT
735
697
701
5.5%
4.8%
EPS (₹)
2.94
2.79
2.81
5.4%
4.6%
Annualised EPS = ₹11.76 → P/E ~ 22.8×
Commentary: Even Bajaj Finance would raise an eyebrow at that 60%+ OPM. Credit cost dropped to 2.5%, and NIM touched 8.7%. The company’s income may not explode, but efficiency sure has. It’s like L&T Finance discovered protein shakes for their balance sheet.
5. Valuation Discussion – Fair Value Range Only
Let’s get nerdy.
Method 1: P/E Based Industry average P/E = 22.7× L&T EPS (annualized) = ₹11.76 → Fair Value = ₹259 – ₹294
Method 2: EV/EBITDA Based EV/EBITDA (industry avg ~15×) EBITDA (TTM) = ₹10,157 Cr EV = ₹1,56,884 Cr → EV/EBITDA = 15.4× (bang on industry median) → Fair Range: ₹255 – ₹290
