L&T Finance Holdings Limited - AUM CAPITAL

L&T Finance Holding ltd. is a financial holding company offering diverse range of financial products and services across the corporate, retail and infrastructure finance sectors, as well as mutual fund products and investment management services through its direct and indirect whollyowned subsidiaries. The company was promoted by Larsen and Toubro limited and it is also registered with RBI as an NBFC-ND-SL. Company has pan India presence with 103 branch offices, 221 meeting centers, 27 KGSK (Kisan Gaurav Seva Kendra) centers and 364 customer care centers. Company operates through four business groups, the Infrastructure Finance Group, the Retail Finance Group, the Corporate Finance Group and Investment Management Group.

Investment Arguments

Company has strong presence in high growth and diversified business which cover the core business segments like infrastructure finance, construction and equipment finance, transportation equipment finance, rural products finance, microfinance, corporate loans and leases, supply chain finance, capital markets finance, the distribution of financial products and investment management products and services. The businesses in which L&T Holdings operate such as agricultural and rural development, infrastructure and energy, that have been identified by the Government of India as focus area under its latest Five Year Plan. The management of the company believe that rural finance and microfinance are not always directly affected by cyclicality in macroeconomic and industry activity. Company's presence in diversified businesses across asset classes and customer segments has contributed significantly to strong revenue growth and reduces the risks associated with product and customer concentration.

High Quality Loan Portfolio: Company has high quality loan portfolio which comprises the funding of primarily income-generating assets and activities. Company emphasis on financing income-generating activities and assets as a means of controlling portfolio quality which has a direct bearing on the quality of loan portfolio. In addition, company's current provisioning and write-off policies and principles exceed the minimum required standard for NBFCs set by the RBI. Company also has an established collection system which helps to manage recoveries efficiently and minimize the losses, thereby preserving the value of their assets.

Strong financial and capital position: L&T Holdings ltd ability to secure reliable and steady sources of capital, allows company to grow and fund the business in line with their business strategy and customer's requirements. Strong Credit rating from rating agency (CARE & ICRA) allows company to access funds at competitive rates compare to its peers. In addition company has good capital structure which gives opportunity to the company to grow their business by raising Tier 2 capital. Company is able to maintain its CARs higher than those statutorily prescribed by the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 2007.

Company's NPAs to Improve: L&T Finance Holdings ltd is effectively working to control its NPA at moderate level. As on 31st March 2011 the consolidated total loans and advances stand at Rs 17,943 crore and Gross NPA stand at Rs 191.7 crore which has improved from the previous year of Gross NPA of Rs 272.8 crore. Company made provision of Rs 104.9 crore to the Gross NPAs which is higher than the minimum amounts required by RBI. As on March'2010 company's microfinance segment had no NPA which is an advantage for the company to sustain and grow in this business segment.

Source : Equity Bulls

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