Tag: Mr. Dinanath Dubhashi

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L&T Finance Holdings announces financial results for the quarter and financial year ended March 31, 2021

Apr 30, 2021 by Rekha Nair 0 Comments #L&TFinance Holdings, #Managing Director & CEO, #Mr. Dinanath Dubhashi

Mumbai: The Board of L&T Finance Holdings (LTFH), a leading Non-Banking Financial Company (NBFC-CIC), today announced the financial results for the fourth quarter and financial year ended 31stMarch 2021. LTFH being a CIC, carries out its businesses through its wholly owned subsidiaries.

LTFHis a market leader (ranked No. 1) in Farm Equipment Finance and Renewable Finance and is ranked #3 financier in both Two-Wheeler Finance as well as in Micro Loans (by book size) along with being one of the leading players in the Infrastructure financing space, more particularly in Renewables, Roads and transmission projects. With a sustainable business model, data analytics driven disbursements and collection and a sharp focus on asset quality and portfolio protection, the company remains committed to building a stable and sustainable organization for its consumers and other stakeholders.

In the quarter, LTFH raised ~Rs 3,000 Cr through Rights issue in Q4FY21, which was oversubscribed by 15%. Furthermore, the Company completed the merger of its operating lending entities – L&T Infrastructure Finance Company Ltd. and L&T Housing Finance Ltd., with L&T Finance Ltd. to create a single unified entity for better operational efficiency, superior cash flow synergies and unparalleled growth.

The Company now maintains a very strong capital adequacy of 23.80%.

Commenting on the financial results Mr. Dinanath Dubhashi, Managing Director & CEO, L&TFinance Holdings, said, “With normalcy returning in the latter half, our focused businesses have witnessed continued momentum in disbursements, with increased market share across desired businesses (15% in Farm and 11% in TW finance). At the same time, we have fully dealt with stresscorresponding to first wave of Covid-19 and have adequately provided for the same through prudent provisioning in FY21 itself and are well prepared to remain resilient on the back of strong fundamentals and a strengthened balance sheet. While the second wave has led to uncertainty and change in market dynamics, we believe that our strengths prepare us well to handle these circumstances.”

Key Highlights

The quarter continued to see economic recovery across sectors led by rural and infrastructure space, which helped our businesses. Our Rural franchise was strengthened with highest ever quarterly disbursements, with leadership positions in Farm & Two-Wheeler financing. Our Infra finance segment witnessed robust sell down momentum which touched Rs. 979 Cr in the quarter and NIMs + Fees increased to 8.17%, duly aided by lowest ever quarterly WAC at 7.65%.

A. Disbursements: In Q4FY21, the company continued to witness a strong pick up in disbursements, duly supported by robust sell down momentum in Infra finance and achieved highest ever quarterly disbursements in Rural finance.
Rural Finance:
a. Farm Equipment Finance: LTFH established itself as the No.1 financier in this segment with a significant increase in market share to 15%. Overall disbursements were up 17% YoY in FY21,achieved on the back of early normalization in CE. The disbursements for Q4 were up 40% on YoY basis. The Company leveraged analytics to gain counter share with identified dealers

b. Two-Wheeler Finance: With improved market share, we have been ranked 3rd in the segment with an 11% increase in market share. In Q4FY21, the business CE saw an uptick from Q3FY21, with disbursements in the quarter also up 14% YoY

c. Micro Loans (ML): With nearly NIL disbursements in Q1FY21 and moratorium till May, Micro Loans business registered its highest ever quarterly disbursement at Rs. 3,181 Cr in Q4FY21, up 54% QoQ and 44% YoY. Re-initiated disbursements to new customers in Q4 on the back of availability of customer repayment data.

Housing Finance:
a. Home Loan: In Q4FY21, the business continued to witness a steady pick up, with home loan disbursements registering a QoQ growth of ~35%. The salaried Home Loan segment registered a growth of 32% QoQ in Q4FY21 and 41% YoY

b. Real Estate: LTFH continued its strategy of focus on project completion by lending only to existing projects during the quarter. The Company plans to start new underwriting in FY22.

Infrastructure Finance:

LTFH continues to be the market leader in Renewable financing and one of the leading players in Infrastructure finance business with robust pipeline to aid disbursement growth in FY22.The business maintained a steady growth QoQ as situation improved. There was a strong uptick in sell-down and pre-payments, led by a strong sell-down desk and pick up in the sector. Strong emphasis was placed on project monitoring through continuous engagement with contractors and developers as well as use of technology like drones, etc.

B. Liquidity: Q1FY21 saw tightened liquidity situation for NBFCs with pandemic led disruptions, moratorium and closure of few debt schemes by a Mutual Fund.LTFH proactively took necessary measures to remain resilient through the pandemic:

• Q1FY21 – Proactively shored up liquidity to safeguard the company against lockdown and moratorium issues
• Q2FY21 – With ease in systemic liquidity & reduction in uncertainty; gradually reduced negative carry and liquidity
• Q3/Q4FY21- Demonstrated strength by raising low-cost funds as well as prepaying / renegotiating high-cost borrowing
• Sharp decline in cost of funds with Q4FY21 WAC at 7.65% – down 78 bps on YoY basis & 17 bps on QoQ basis

As of March 2021, the company maintained liquid assets in the form of cash, FDs and other liquid investments to the tune of Rs. 10,122 Cr.

C. Highest Credit Ratings: A diversified business presence, strategic importance to L&T, strong resource raising ability and adequate capitalization resulted LTFH and all its lending subsidiaries’ long-term ratings been rated ‘AAA’ by all four rating agencies:

a. CRISIL – May 2020 and in December 2020
b. CARE – October 2020
c. India Ratings – September 2020
d. ICRA – September 2020

Subsequent to the merger of L&T Infrastructure Finance Company Ltd and L&T Housing Finance Ltd into L&T Finance Ltd (L&T Finance) becoming effective, all the Rating agencies have reviewed the ratings of L&T Finance and have assigned / reaffirmed the ‘AAA’ rating in April-21.

D. Focus on Strengthening Balance Sheet:LTFH strengthened its balance sheet by maintaining adequate PCR on GS3 book and additional provision on non-GS3 book for any future economic uncertainty. The GS3 assets of the company stood at 4.97% in Q4FY21 of its book, showing a reduction of 39bps YoY. NS3 registered the sharpest improvement since the introduction of Ind-AS and reduced from 2.28% to 1.57% YoY. The company also strengthened the PCR on Stage 3 assets from 59% in Q4FY20 to 69% in Q4FY21. Asset quality and PCR has improved in FY21 vis-à-vis FY20 despite the impact of Covid, showcasing strong underwriting, robust collection and stringent EWS

 

(Rs. Cr) Q4FY20 Q3FY21 Q4FY21
Gross Stage 3 5,037 4,935 4,504
Net Stage 3 2,078 1,791 1,377
Gross Stage 3 % 5.36% 5.12% 4.97%
Net Stage 3 % 2.28% 1.92% 1.57%
Provision Coverage % 59% 64% 69%

As a prudent measure, LTFH is carrying additional provisions of Rs. 1033 Cr (1.2% of standard book) as of Q4FY21.

E. Focused Lending Book: The share of retail portfolio in the overall book grew to 43.4% in FY21. Within the book, Farm Equipment grew 22% on YoY basis and TW book by 8%. The asset size of our Salaried home loans portfolio also grew by 6% in the same period.

 

(Rs. Cr) Q4FY20 Q4FY21 Book Growth (%)
Focused Lending Business
Rural Finance 27,661 30,080 9
Housing Finance 26,584 23,689 (11)
Infrastructure Finance 38,909 37,543 (4)
Total Focused Book 93,154 91,312 (2)
Defocused Businesses 5,230 2,702 (48)
Total Lending Book 98,384 94,013 (4)

The Average Assets under Management (AAUM) of the Investment Management business stood at Rs.72,728 Cr in Q4FY21. The AUM for Equity and Fixed Income asset classes as on 31stMarch,2021, stood at Rs. 40,374 Cr and Rs. 23,386 Cr, with a growth of 4% and 4%, respectively, on a QoQ basis.

F. Financial Performance

Concerted on-field efforts, data analytics led prioritization and resource allocation has led to an increase in collection volumes across businesses to pre-covid levels as well as strong disbursement momentum, supported by a higher total income.

The company posted a consolidated Earnings before Credit Cost (EBCC) of Rs. 1,481 Cr in Q4FY21, a 24 % increase YoY, from Rs. 1,192 Cr in Q4FY20.
o Steady increase in Fee income each quarter (Rural fee up by 5% in FY21 despite disbursements being down by 15%); OverallFee income up by 46%% YoY in Q4FY21
o Reduction in cost of funds by 78 bps YoYfrom 8.43% in Q4FY20 to 7.65% in Q4FY21
o Increase in total income by 16% YoY in Q4FY21
o Reduction in GS3 from 5.36% to 4.97% YoY; NS3 reduced from 2.28% to 1.57% YoY; Increase in PCRfrom 59% to 69% YoY
The PBT for Q4FY21 stood at Rs. 828 Cr, up 135% QoQ and 88% YoY (Rs. 440 Cr in Q4FY20).
o PAT (before exceptional items) of Rs.428 Cr in Q4FY21 vs Rs.386 Cr in Q4FY20
o After one-time exceptional items, PAT for Q4FY21 is Rs. 267 Cr

Mr. Dubhashi further added, “The merger of our three operating lending entities into one entity will enhance governance standards and we also believe that the simplified structure will lead to operational efficiencies and cash flow synergies, thereby creating long term value for stakeholders.Through FY21, LTFS has shown the ability to deal with extremely tough conditions and has emerged strongly. With the recent capital raise, we are suitably placed to deliver medium to long-term growth with increase in retailisation& well positioned to weather any short-term disruptions arising from second wave of Covid.”

Business World, News

L&T Finance Holdings Ltd. (LTFH) announces financial results for Q3FY21

Jan 18, 2021 by Rekha Nair 0 Comments #LTFH, #Managing Director & CEO, #Mr. Dinanath Dubhashi

Mumbai: The Board of L&T Finance Holdings (LTFH), a Non-Banking Financial Company (NBFC), present in lending businesses including Rural, Housing and Infrastructure finance,today announced the financial results for the quarter ended December 31, 2020.

LTFH is a market leader in Farm Equipment finance, and among the top five financiers in Two-Wheeler finance, number three financier in Micro Loans and one of the leading players in financing of Infrastructure sectors like renewables and roads. With a sustainable business model, data analytics led collection and disbursements, and a sharp focus on asset quality, the company remains committed to building a stable and sustainable organization for its consumers and other stakeholders.

Commenting on the financial results Mr. Dinanath Dubhashi, Managing Director & CEO, LTFH, said, “Post Covid, the rural economy has performed better than urban and this trend is reflected in our disbursements, which are almost at pre-covid levels. The festive season uptick and a steady recovery in collection volumes also underline our rural performance. Our strong performance in Infra disbursements should be seen alongside the sell-down volumes, which have increased on a YoY basis. It allows us to generate more fee income while proportionately reduces the need for allocating higher capital.”

Key Highlights of Q3FY21:

The quarter saw a strong economic recovery across sectors led by rural and infrastructure. Higher farmer income, positive rural sentiment, combined with the festive season helped maintain market share in farmequipment and two-wheeler finance.

A. Disbursements: The company witnessed excellent pick-up in disbursements across businesses and has achieved highest quarterly disbursement since Q1FY20.

  • Rural Finance: The quarter witnessed steady QoQ&YoY improvements in disbursements across Farm Equipment Finance and Two-Wheeler Finance.
  1. Farm Equipment Finance: Disbursements grew at 43% QoQ(13% YoY), which was the highest quarterlydisbursement since FY17. It witnessed increased business from top dealers on the back of strengthened Trade Advance (TA) proposition
  2. Two-Wheeler Finance: Disbursement growth was at 50% QoQ(10% YoY) and the business continues to see growth momentum
  3. Micro Loans (ML): Strong pickup in ML disbursements QoQ, up 53%, owing to improved collection efficiency. However, disbursements were down 19% YoY as focus remained on existing customers
  • Housing Finance:
  1. The Home Loan business which is focused largely on the salaried segment and direct sourcing, witnessed moderate pickup in disbursements. Home loans to the salaried segment constituted 94% of Q3FY21 disbursements, standing at approx. 93% of Q3FY20 levels
  2. Real Estate: Continued to be selective in disbursements with focus on providing support to existing projects to ensure project completion.
  • Infrastructure Finance: Highest quarterly disbursement since Q1FY19. The business continues to maintain strong emphasis on portfolio monitoring and disbursement focus towards existing projects completion.

 B. Liquidity: Astute treasury management and abundant market liquidity has helped in reducing cost of borrowing, leading to increase in NIMs+Fees to reach 39%

  • Reduction in cost of borrowing by 50bpsQoQ (from 8.32% in Q2FY21 to 7.82% in Q3FY21)
  • Maintained lower average liquid assets during the quarter
  • Prepayment for high cost borrowing and renegotiation of interest rates

AAA rating and strong parentage has helped LTFH bring down the cost of funds this quarter. As of December 2020, the company maintained Rs. 16,442 Cr of liquidity including assets in the form of cash, FDs and other liquid investments of Rs. 7,709Cr

C. Highest Credit Ratings: A diversified business presence, strategic importance to L&T, strong resource raising ability and adequate capitalization resulted in LTFH and all its lending subsidiaries’ long-term ratings rated ‘AAA’ by all four rating agencies:

  1. CRISIL – May 2020 and in December 2020
  2. CARE – October 2020
  3. India Ratings – September 2020
  4. ICRA – September 2020

 D. Balance Sheet: LTFH continues to maintain a strong capital adequacy of 82%.  Furthermore, the ongoing traction in our analytics-based collection efforts augurs well with our objective of building a strong balance sheet.

The Gross Stage 3 assets of the company stood at 5.12%in Q3FY21 of its book, showing a reduction of 82bps YoY. The company also strengthened the PCR on Stage 3 assets from 57% in Q3FY20 to 64% in Q3FY21.

Period Q3FY20 Q2FY21 Q3FY21
Gross Stage 3 5,662 4,921 4,935
Net Stage 3 2,458 1,530 1,791
Gross Stage 3% 5.94 5.19 5.12
Net Stage 3% 2.67 1.67 1.92
Provision Coverage % 57 69 64

As a prudent measure, LTFH continues to carry the additional provisions of Rs. 1,739 Cr in Q3FY21. This is on account of macro prudential provisions, COVID-19 and accelerated Expected Credit Losses (ECL) provisions on Stage 1 & 2 assets, which are over and above the ECL model on GS3 and Stage 1 & 2 assets.

 E. Focused Lending Book: Within the focused lending book, the Rural Finance book grew by 4% YoY, aided by growth in Farm Equipment Finance book by 18%,and the Two-Wheeler Finance book by 9%. The Home Loan segment grew by 3%YoY.

 

Rs. Cr Q3FY20 Q3FY21 Book Growth (%)
Focused Lending Business
Rural Finance 27,594 28,828 4
Housing Finance 26,689 26,174 (2)
Infrastructure Finance 39,674 41,456 4
Total Focused Book 93,956 96,459 3
Defocused Businesses 5,497 3,640 (34)
Total Lending Book 99,453 1,00,099 1

 

The Average Assets under Management (AAUM) of the Investment Management business stood at Rs.68,976 Cr in Q3FY21. The AUM for Equity and Fixed Income asset classes as on 31December 2020 stood at Rs. 38,906 Cr and Rs.22,483 Cr, with a growth of 9% and 20%,respectively, QoQ basis.

Financial Performance:

LTFH is focused on leveraging the power of data and analytics to build a ‘collection-led disbursement’ model, which, along with economic recovery in the rural segment, has led to a significant improvement in collection efficiency and a strong pickup in disbursements (QoQ). The sentiment continues to remain positive in the rural sector.

The company posted a consolidated PAT of Rs. 291 Cr in Q3FY21, a 10% increase QoQ, from Rs. 265 Cr inQ2FY21

  • PAT in Q3FY21 saw a 51% reduction YoY, from 591 Cr in Q3FY20
  • NIMs+Fees at 39% (Q3FY21) vs 7.29% (Q3FY20), highest ever since FY17
  • Reduction in GS3from 94%to 5.12% YoY;NS3 reduced from 2.67% to 1.92% YoY; Increase in PCR from 57% to 64% YoY
  • The cost of funds has gone down by nearly 50 bps for the entire book from 32% in Q2FY21 to 7.82% in Q3FY21

Mr. Dubhashi further added, “In the long term, structural changes such as government initiatives, normal monsoons and better infrastructure will continue to improve financial health in rural. We will maintain focus on capitalizing on our market leadership position in Farm Equipment and Two-Wheeler Finance to drive business volumes.”

 

Business World

Comment on RBI Policy by Dr. Niranjan Hiranandani, President (National) NAREDCO and Assocham, Mr. Dinanath Dubhashi, MD & CEO, L&T Financial Services & Mr. Kaushal Agarwal – Chairman, The Guardians Real Estate Advisory

Oct 10, 2020 by Gouri Achary 0 Comments #(National) NAREDCO, #ASSOCHAM, #Dr Niranjan Hiranandani, #L&T Financial Services, #MD & CEO, #Mr. Dinanath Dubhashi, #Mr. Kaushal Agarwal, #The Guardians Real Estate Advisory

RBI’s 9.5 percent contraction forecast was much anticipated: Dr Hiranandani President (National) NAREDCO and Assocham

The decision to rejig home loan rules will provide a boost to the real estate sector
The Reserve Bank of India’s Governor Shaktikanta Das announcement of keeping the repo rates unchanged while forecasting a 9.5 per cent contraction in FY21 was on expected lines stated ASSOCHAM president, Dr. Niranjan Hiranandani.

“It affirms our beliefs that the worst is over for the Indian economy. The RBI governor also confirmed that the contraction in economic growth witnessed in the April-June quarter with 23.9 per cent is behind us. He also accepts that growth is likely to pick up in the second half of the fiscal and enter into the positive zone in the January-March quarter,” He pointed out.

According to Dr. Hiranandani, the RBI’s decision to keep key rates unchanged was also much anticipated. “Further reduction in key interest rates was not a possibility at this juncture. The RBI’s decision to extend the scheme for co-lending to all NBFCs, HFC in respect of all eligible priority sector loans will allow greater operational flexibility to the lending institutions and is much welcomed,” he said.

Since February last year, the monetary policy committee has cut the repo rate by 250 basis points.

RBI’s decision to rationalise the risk weights on home loans and link them to Loan to value ratios only will give a boost to the real estate sector as well, he said. “Particularly this step would benefit borrowers of higher value loans. It would ensure that more credit is available to borrowers. This move is a much appreciated step recognising the role of the real estate sector in generating employment and economic activity,” he added.

Dr. Hiranandani explained that the industry welcomes the Reserve Bank of India’s announcement to undertake further measures as necessary to assure market participants of access to liquidity and easy finance conditions. “The RBI has through its proactive measures taken honest efforts to provide access to easier credit to smaller businesses. However, we believe further steps would be needed to revive the economy,” he said.

Dr. Kaushal AgarwalMr. Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory

“The status quo was on expected lines. The steep reduction in the rates over the past several months are slowly beginning to show impact on the ground. The move by RBI to link risks to loan to value will help banks shred the cautious lending approach. The move is bound to offer a much-needed jump start to lending and liquidity cycle in the marketplace. The move is quite differentiated and going to be effective.”

 

MD&CEO_Dinanath Dubhash

Mr. Dinanath Dubhashi, MD & CEO, L&T Financial Services

‘The current announcements by RBI underline its seriousness in pushing for collaborative efforts of banks and NBFCs in reaching out to the unserved as well as the underserved sectors of the economy.

Along with operational efficiency, this move augurs well for the sector. Extension of the co-origination scheme will give greater operational flexibility to the lending institutions. The introduction of round the clock RTGS facility is encouraging and supportive of growth. Measures like on-tap TLTRO will help build further confidence in the sector and we will await the details on specific sectors applicable for TLTRO as well as the terms and conditions to be met for availing the benefits. Having said that, we are hopeful that a broad spectrum of sectors, including NBFCs, will be considered.’