L&T Finance, a Non-Banking Financial Company (NBFC) of the highest tier, reported a 31% increase in its consolidated net profit for the first quarter of the fiscal year 2027 (Q1FY27). This growth was supported by a strong rise in retail lending, improved asset quality, and reduced borrowing costs.
First Quarter Financial Performance
For the reporting period ending June 2026, the company's consolidated loan portfolio grew by 27% year-on-year, reaching INR 1.30 trillion from INR 1.02 trillion the previous year. The retail loan book grew particularly fast, increasing by 28% to INR 1.28 trillion, surpassing the annual growth target of over 20%.
Loan Disbursement Dynamics
The total volume of retail disbursements increased by 36% during the quarter, amounting to INR 23,852 crore compared to INR 17,522 crore the previous year. Personal loans showed significant growth, more than doubling with an increase of 126% to INR 4,380 crore. Furthermore, two-wheeler financing grew by 41%, and rural small business financing grew by 24%, while housing loans and mortgage loans increased by 22%.
Asset Quality Improvement
The gold loan book nearly tripled, reaching INR 3,829 crore from INR 1,360 crore a year ago. The company also expanded its network of gold loan branches to 343 by the end of the quarter. Asset quality continued to improve: Gross Stage 3 assets decreased to 2.86% from 3.31% the previous year, and Net Stage 3 assets reduced to 0.90% from 0.99%. The cost of credit fell to 2.54% from 3.43% in the quarter a year ago and dropped by another 10 basis points compared to the prior period.
Profitability and Cost Metrics
L&T Finance noted that its Net Interest Margin plus fees improved to 10.47% from 10.22% the previous year. Return on Assets rose to 2.48% from 2.37%, and Return on Equity increased to 12.71% from 10.86%. Through diversified debt structuring, the company lowered its weighted average cost of funding by 48 basis points year-on-year, bringing it down to 7.20%.
Strategy and New Appointments
Sudipta Roy, Managing Director and CEO of L&T Finance, stated that the company's continuous investments in technology, analytics, and Artificial Intelligence (AI) are strengthening the customer experience. Moving forward, the company plans to continue investing in innovation, expanding its distribution network, and focusing on profitable, quality growth under the Lakshya 2031 strategy. Additionally, L&T Fin appointed Prashant Kumar, former MD & CEO of Yes Bank, as an additional (independent) director for the initial term of five years, starting July 10, 2026, until July 9, 2031. The bank noted that Kumar possesses deep expertise in risk management, regulatory interaction, capital management, and institutional transformation, with over forty years of experience at major Indian financial institutions, including State Bank of India and Yes Bank.
