L&T Finance shares gain over 2% as UBS initiates ‘buy’ for a potential upside of over 28%

Shares of the investment company L&T Finance in early trade climbed over 2 per cent to day's high price of Rs 185.15 after global brokerage UBS turned bullish on the counter and initiated a ‘buy’ call with a target of Rs 230, implying potential gains of over 28 per cent.

In its previous day’s trade, the company’s shares ended over 1 per cent higher at Rs 181.1 and are trading close to their 52-week high price of Rs 188.

The brokerage believes that the infrastructure company’s arm is now on a path to expand its balance sheet after over 5 years, as it nears completion of its loan book shift from wholesale to retail. The brokerage further stated that L&T Finance has a leading rural portfolio accounted by 45 per cent of the total AUM and stands to benefit from a likely government increase in rural spend.  Additionally, it added that the market is underestimating its ROA or return on assets trajectory.

The brokerage views the unwinding of the balance of its wholesale exposure could drive 30bpsROA improvement; hence expect RoA to reach 2.9% by FY26E versus 2.2 per cent in FY24. \

UBS believes the risk-reward of the company is favourable and the stock is trading at1.6X FY26E P/B.

The consensus recommendation on the stock from 16 analysts is a 'buy' with 10 of them giving a strong buy recommendation on the counter, Trendlyne data shows.

L&T Finance share price performance

The stock over the last one year has climbed 44 per cent while Nifty 50 has zoomed over 25 per cent during the same time.

About L&T Finance

L&T Finance Limited is an India-based non-banking financial company commanding a m-cap of around Rs 45,576.51. The company is into offering personal loans, two-wheeler loans, home loans, rural business loans, farm loans, and SME loans.