Mumbai: L&T Finance Holdings, the non banking finance company of the engineering to IT L&T group reported a 31% fall in consolidated net profit to Rs 267 crore in the quarter ending 31 March 31 from Rs 386 crore a year ago mainly due to a rise in tax expenses even as operations came back to pre Covid levels led by a strong disbursement in rural loans.
Tax expenses rose seven times to Rs 452 crore versus Rs 71 crore a year earlier mainly due to multiple tax demands from the government post the February budget, tax related to the company’s infrastructure development fund and also stamp duty paid on merger of its subsidiaries L&T Housing, L&T Finance and L&T Infrastructure with the parent company.
However, CEO Dinanath Dubashi said operationally the company has the best quarter in more than a year led by higher collections, record disbursements in rural lending, increase in sell down from the risky infrastructure finance and record low NPAs.
“The tax expenses were a one off and may be challenged in the future but operationally and in terms of profit before tax we have had the best quarter in the fiscal and are increasingly optimistic of continuing the momentum in the current fiscal,” Dubashi said.
Disbursements in micro finance loans have increased from next to nothing in the first quarter of the fiscal to the highest ever quarterly disbursement at Rs. 3,181 crore in Q4FY21, up 54% QoQ and 44% YoY. Home loans grew at 41% year on year too.
Collections efficiency was back to pre Covid levels led by a 99.10% efficiency in micro loans and 98.4% in two wheeler loans. Overall total collections increased 33% year on year bringing down NPAs.
The gross NPAs assets of the company at 4.97% down 39 basis points year on year while net NPAs at 1.57% were at an all time low.
Provision coverage ratio also increased to 69% in March 2021 from 59% a year ago.
“We have used Rs 700 crore out of the Rs 1700 crore provisions we had made for Covid and are ready to provide more if needed. Overall our liquidity, capital adequacy and provisions means that we are ressonably prepared for the un certainties due to the second of Covid which is ongoing,” Dubashi said.
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 crore. During the quarter the company raised Rs 3,000 crore through a rights issue improving its capital adequacy to 23.80%.
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