L&T Finance Holdings (LTFH IN) Q3FY18 Earnings First Cut: Strong performance continues; stable asset quality, ROE expansion on track

** Net operating income +36% yoy (+17% qoq) at Rs12.7bn

** Opex 27% yoy (+17% qoq)

** Operating profit 37% yoy (+10% qoq) at Rs9.41bn

** Provisions +50% yoy (+5% qoq)

** Tax rate at 14% - lower on account of deferred tax benefits  

** PAT +42% yoy (+7% qoq) at Rs3.84bn – largely in line with estimates

** AUMs of the focused business grew 26% yoy and disbursements grew 88% yoy

** Asset quality remains stable with GNPLs @ 5.5% vs 5.8% in Q2FY18 and NNPLs dropped to 2.9% from 3.3% in Q2FY18; PCR improved to 49% from 43% in Q2FY18

The post results conference call is scheduled on 29^th January 2018 at 11.00am IST; Dial-in: +91 22 3938 1071 / +91 70456 71221

The stock trades at 3.0x FY19E BV and 2.5x FY20E BV. We have a BUY rating on the stock with a price target of Rs250.

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