L&T Finance Holdings

Non Banking Finance Company, L&T Finance Holdings reported a decent set of numbers for the quarter ending June 30, 2019, against the backdrop of difficulty being faced by the NBFC sector due to liquidity issues.

Net profit of the company rose 1.93 per cent to Rs 548.79 crore during the period as against Rs 538.38 crore during the previous quarter ended June 2018.

Total income at the NBFC, saw a very healthy rise and was placed at Rs 3,689.50 crore from Rs 3,170.42 crore in the year-ago period. Most importantly, even as the NBFC space is facing a slowdown, L&T Finance Holdings said it maintained a positive asset liability gap in all buckets up to one year and maintained liquidity of Rs 13,133 crores.

L&T Finance Holdings: Shares at 52-week low

The shares of L&T Finance Holdings is trading at very close to its 52week low of Rs 102. Given that it has a strong pedigree, and a solid rating, the stock will be discounted at higher levels going ahead. In fact, we anticipate the company will report an EPS of around Rs 12 for the current year. This means the stock is discounted only 9 times its one year forward earnings.

The stock is also available at a price to book of just 1.53 times, which is not bad at all. As and when the economy gathers steam and there is a better offtake of credit, be rest assured that we would see significant gains in the stock of L&T Finance Holdings. In fact, the shares have fallen from levels of Rs 189 to the current levels of Rs 102, which makes it extremely attractive to buy.

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This stock has halved in value from its 52-week high of Rs 1,400 to the current levels of Rs 528. The dividend yield on the stock is a cool 6.7 per cent. If the RBI approves the merger of the company with Lakshmi Vilas Bank, it would be a feather in the cap and would be a next trigger for the stock.

Fundamentally too, the company has managed its liquidity problems much better, as compared to some peers.

The board of the company is expected to meet on August 6 to consider annual results and dividends. The results of the company maybe tepid in the quarter ending June 30, 2019, but the dividend is what could keep the stock going.

The shares are also not trading too expensive at around 6 times one year forward earnings. Buy the stock for decent gains going forward.

If the merger of the company with Lakshmi Vilas Bank does go through, it could be a boost to the stock price.

Disclaimer

This article is strictly for informational purposes only. It is not a solicitation to buy, sell in securities or other financial instruments. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author of this article do not accept culpability for losses and/or damages arising based on information in this article.

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