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UBS initiates buy on L T Finance, price target Rs 165

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UBS has initiated coverage of L-T Finance in the long term with a buy rating and set a price target of Rs 165.

The stock gained a percent to Rs 127.25 on Friday while the BSE Sensesex closed 12.81 points (0.03%) up at 41,945.37. Company FinancialsFor the quarter ended 31-12-2019, the company has reported consolidated sales of Rs 3630.64 crore, up .54% from last quarter sales of Rs 3611.31 crore and up 11.92% from last year same quarter sales of Rs 3243.99 crore.

The company has reported net profit after tax of Rs 591.47 crore in the latest quarter.

The company’s top management includes Dr.(Mrs.)Rajani Gupte, Mr.B Prabhakar, Mr.Dinanath Dubhashi, Mr.P V Bhide, Mr.Pavninder Singh, Mr.R Shankar Raman, Mr.S V Haribhakti, Mr.T Thomas Mathew, Ms.Nishi Vasudeva.

Company has Deloitte Haskins - Sells LLP as its auditors.

As on 31-12-2019, the company has a total of 2,000,507,960 shares outstanding.

Investment RationaleL-T Finance has de-rated in last 12 months due to its exposure to construction finance, renewable projects, IL-FS and the microfinance segment in East India.The company will be a major beneficiary of the current liquidity crisis in construction finance in the long term, according to UBS.

The valuation of 1.0x FY22 estimated price to book after adjusting for its stake in L-T Mutual Fund is attractive, given its strong rural presence, funding profile, likely market share gains in housing and infrastructure finance and healthy return on equity of 16% plus, said the brokerage.




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