Macquarie has initiated an “outperform” rating with a price target of ₹400 per share, indicating an upside of 23% from its previous close. This is the highest price target on the street for L&T Finance among the 24 analysts who now have coverage on the stock.
The brokerage said L&T Finance is a diversified retail lender and has fixed its legacy issues. The company now targets peer-like growth from a largely retailised book, according to the note.
L&T Finance shares are trading at a discount of 35% to 50% in comparison to their larger peers, making valuations attractive. This is despite comparable Assets Under Management (AUM) and earnings growth expectations, Macquarie noted.
For the stock to re-rate going forward, Macquarie wants to see strong earnings growth and an improvement in its Return on Assets (RoA).
It remains confident that L&T Finance can deliver 28% earnings per share (EPS) compound annual growth rate (CAGR) over financial year 2026-2029.
L&T Finance reported its June quarter earnings last month. Its consolidated net profit increased by 28.7% to ₹902 crore, while its revenue increased by 25% to ₹4,894.9 crore. The net interest income (NII) during the quarter was up 28.4% to ₹2,924.8 crore during the quarter.
At the end of the June quarter, L&T Finance’s consolidated loan book reached a record of ₹1.29 lakh crore, up 27% from the previous year, driven by a 28% rise in its retail loan book. Retail disbursements rose 36% to ₹23,852 crore, while the asset quality improved with gross Stage 3 assets declining to 2.86% from 3.31% in the year-ago period.
Of the 30 analysts who have coverage on the stock, 16 have a “buy” rating 10 have a “hold” rating and one has a “buy” rating.
Despite the positive commentary from Macquarie, shares of L&T Finance are trading 3% lower on Wednesday at ₹315.4. With this fall, the stock has turned negative on a year-to-date basis.