L&T Finance Holding Research Report By IndiaNivesh

LTFH has underperformed the market mainly due to stress in both infrastructure segment and retail business resulting in asset quality deterioration. We believe LTFH will be biggest beneficially of both revival in economy and decline in interest rates. We are not increasing our earnings estimates and keep it unchanged with growth of 18% CAGR for FY14-16E after factoring in provisioning expense of 1.4% (as a % of advances). Recent correct in stock price gives a good opportunity to enter at valuations of 1.5x FY16E ABV and hence recommend BUY with target price of Rs 80, valuing it at 2x FY16E ABV. We assign lower multiple to L&TFH (vs other NBFCs valuation of 2.5-3.5x for FY16) mainly due to comparatively lower return profile 12-13% ROEs and 1.5-1.6% ROAs.

LNT_Finance_IndiaNivesh