L&T Finance Checks All The Right Boxes For Long-term Gains: SEBI RA Nikhil Gangil

The analyst sees L&T Finance as a strong retail-focused NBFC poised for long-term compounding

While the market is obsessed with technology, manufacturing, and PSU stocks, L&T Finance is quietly building strength, SEBI-registered analyst Nikhil Gangil said.

While many non-banking financial companies (NBFCs) chase headline growth, L&T Finance focuses on fundamentals — strong risk management, a healthy balance sheet, and a clear retail strategy, he added.

Gangil said the company has robust fundamentals, consistently improving return on assets (ROA) and return on equity (ROE), along with increasing net interest margins (NIMs), despite an increase in funding costs.

The company’s capital adequacy ratio (CAR) stands strong at over 20%, while its gross and net NPAs are low.

Gangil said the company has “retailized” its loan book, with over 90% of loans now retail, reducing exposure to risky corporate lending. Their strategic transformation under the “Lakshya” plan, which involved exiting infrastructure finance and pivoting fully to retail, is now delivering results.

Gangil noted that the company, backed by the L&T Group, has a wide distribution network across rural and semi-urban India.

It has heavily invested in digital lending and analytics, enabling faster loan turnarounds. Its diversified loan mix includes microfinance, rural finance, two-wheeler, and home loans.

With the next credit cycle expected to favor digitally savvy, diversified, and well-governed NBFCs, L&T Finance is well-positioned to benefit, the analyst said, adding that its previous cycle peaked in 2019, bottomed in 2022, and it could reach a new peak by 2026–27.

However, Gangil urged caution, citing increasing competition from fintechs and larger NBFCs. He also pointed to potential yield pressures from expanding low-ticket loans and the execution risk of maintaining low NPAs as key challenges for L&T Finance.

He believes that while L&T Finance may not deliver overnight gains, it offers a compelling compounding opportunity for long-term investors.

L&T Finance shares closed 0.9% lower at ₹189.85 on Tuesday. Year-to-date, the stock has gained nearly 40%.

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