L&T Finance Ltd (LTF)

FairStock Score: 48/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Promoter holding at 66.03% gives strong ownership alignment and long-term commitment.
• Scale and brand: latest quarter had sales of ₹4,578 Cr and net profit of ₹738 Cr.
• Piotroski F-Score of 7/9 suggests basic profitability, asset quality and efficiency are intact.
• Sales growth of 10.43% and profit growth of 9.74% show steady expansion.
• Book value of ₹102.11 provides a measurable asset backing against the ₹292.10 price.

Concerns

• Valuation is rich: P/E 25.11, P/B 2.86, while Graham Number is only ₹161.20 and margin of safety is -76.15%.
• High leverage: D/E of 3.61, combined with Altman Z-Score of 0.99, leaves little room for credit stress.
• Free cash flow is deeply negative at ₹-16,115 Cr; the business consumes capital even as it reports profits.
• Dividend yield of 0.97% is thin, so the return relies almost entirely on future price appreciation.

AI Analysis

At first glance, L&T Finance is a business I can understand: a large Indian NBFC with the L&T name and promoter holding of 66.03 per cent. That ownership alignment matters. But my job is to buy value, and today's price does not allow me to do that. The company is growing at a moderate pace—sales up 10.43 per cent and profit up 9.74 per cent—yet the market is paying a P/E of 25.11 and a P/B of 2.86. Graham would demand a price closer to book value, and a conservative Graham Number of ₹161.20 against a price of ₹292.10 means the margin of safety is deeply negative at -76.15 per cent. Financial health is not that of a classic compounding machine. ROE is 10.99 per cent and ROCE is 8.71 per cent; for a lender with debt/equity of 3.61, I would want a higher return to compensate for leverage. The Piotroski F-Score of 7/9 is respectable, but Altman Z-Score of 0.99 is a warning sign, even allowing for weaknesses in applying Z-scores to financial firms. Free cash flow is a large negative at ₹-16,115 Cr; lending is capital hungry, but this needs watching. Dividend yield of 0.97 per cent gives little while waiting. EV/EBITDA of 768.39 looks bizarre and, for a financial firm, is not a meaningful yardstick. FairStock Score at 46/100 says 'mixed', and I agree. This is a reasonably established franchise, but at this price it is not a bargain. A 10 per cent grower is a slow grower in my taxonomy, and a slow grower deserves a far lower multiple. I will keep it on the watchlist and wait for a price that leaves a real margin of safety.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer