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We do not publish one number for L&T Finance — and here is why.
On today's figures the market pays roughly 3.0 times what our model says L&T Finance is worth. On a company this widely followed, a gap that large almost always means our model is missing something rather than that thousands of investors are wrong. So we show the workings and say plainly that we cannot stand behind a single figure here.
- How it is valued: no single figure is published here — our model and the market disagree too far.
- What the price assumes: 25.5% return on equity, against 10.7% the model takes from its own record.
- Ten-year record: Between FY2020 and FY2026, L&T Finance's revenue went from ₹14,176 crore to ₹17,914 crore — it compounded at about 4% a year over 6 years.
- Biggest swing factor: Retail loan growth. Main risk: Rural stress.
01Larsen & Toubro's lending arm
L&T Finance, a subsidiary of Larsen & Toubro, is a non-bank lender. It used to lend heavily to infrastructure and real-estate projects but has largely exited that wholesale book.
It now focuses on retail lending: tractors and farm equipment, two-wheelers, rural group loans, personal loans, home loans and small-business loans, using data and digital tools to underwrite.
02What the market is assuming
Work backwards from today's share price and you can see what buyers are quietly taking for granted. Here is the return on equity that price implies for L&T Finance, next to what the model assumes from the company's own record.
The further apart these two numbers are, the bigger the bet a buyer at today's price is making.
03L&T Finance's record, in plain numbers
Between FY2020 and FY2026, L&T Finance's revenue went from ₹14,176 crore to ₹17,914 crore — it compounded at about 4% a year over 6 years. Net profit grew from ₹1,700 crore to ₹2,983 crore, about 10% a year — faster than revenue, so margins widened. In FY2026 it kept 16.7% of revenue as net profit — against a low of 6.9% in FY2021 and a high of 17.1% in FY2024. The latest year added 12.5% to revenue, well ahead of its own long-run pace.
Revenue and earnings per share in ₹, return on equity and leverage as ratios — all from the filed statements.
Revenue and net profit by year (₹ crore)
| Year | Revenue | Net profit | Margin |
|---|---|---|---|
| FY2020 | 14,176 | 1,700 | 12.0% |
| FY2021 | 13,678 | 949 | 6.9% |
| FY2022 | 11,930 | 1,049 | 8.8% |
| FY2023 | 12,775 | 1,536 | 12.0% |
| FY2024 | 13,581 | 2,317 | 17.1% |
| FY2025 | 15,924 | 2,643 | 16.6% |
| FY2026 | 17,914 | 2,983 | 16.7% |
04How L&T Finance gets valued — and why
Estimate withheld — model and market disagree too farOur model and the market disagree so far apart on this company that the model is the more likely one to be wrong. Rather than publish a number we cannot stand behind, we show the workings and say so.
05What decides L&T Finance's value
Retail loan growth
The retail book drives earnings.
Return on equity
Retail lending earns more than the old wholesale book.
Credit costs
Rural and unsecured loans carry higher defaults.
Funding
L&T's backing keeps borrowing costs low.
06What could go wrong
- Rural stress. Microfinance and farm loans can sour quickly.
- Competition. Banks and NBFCs chase the same customers.
- Regulation. Tighter NBFC rules raise capital needs.
07What the full L&T Finance valuation shows
Sign in free to see the complete L&T Finance valuation
- ✓The full model workings — and exactly where the model and the market part ways
- ✓Every assumption — growth, returns and cost of capital, with sources
- ✓Bull, base and bear cases — and exactly which assumptions move between them
- ✓Peer comparison — against Bajaj Finance, Shriram Finance and Cholamandalam
- ✓Downloadable report — the full write-up, yours to keep
08Questions people ask about L&T Finance
Who owns L&T Finance?
Larsen & Toubro is the majority shareholder.
What does L&T Finance lend for?
Farm equipment, two-wheelers, rural loans, homes, personal and small-business loans.
Why did L&T Finance exit infrastructure lending?
To focus on retail lending, which earns higher returns with smaller individual risks.
Is L&T Finance overvalued?
At ₹277 the market is pricing in roughly 25.5% sustained ROE, against the ~10.7% its own record supports. That is more than it has delivered, so the price is justified only if the business can hold a rate it has not previously sustained.
What is the intrinsic value of L&T Finance?
This business is a group of operations with different economics, so a single blended figure would describe none of them. The parts are valued separately and the breakdown is in the report, rather than one number that cannot be defended.
How much debt does L&T Finance carry?
Debt to equity stands at 3.03, down from 3.51 at the start of the period — the balance sheet is a core input to the cost of capital used here.