In a strategic move aimed at maintaining a healthy balance sheet, L&T Finance has decided to sell ₹4,762 crore ($640 million) worth of its distressed-asset loan book to three asset reconstruction companies (ARCs). This decision was announced on Wednesday.
Phoenix ARC, backed by Kotak Mahindra Bank, is expected to be the primary acquirer of the 15 accounts up for sale. The initial proposal from L&T Finance involved a larger portfolio of ₹5,293 crore ($713 million) encompassing 16 accounts. Only 15 accounts were eventually sold, as ARCs showed a lack of interest in the exposure from Delhi-NCR realtor Supertech.
This decision by L&T Finance is part of an ongoing effort to sanitize its books and manage financial risks. By offloading these distressed assets, the company underscores its commitment to maintaining a robust financial position in the market.
According to InvestingPro, L&T Finance has a market cap of 3.73 billion USD and a P/E ratio of 16.41. The company's revenue for the first quarter of 2024 was 759.09 million USD, and despite a slight dip in revenue growth, the firm still managed to achieve a gross profit of 752.23 million USD, representing a gross profit margin of 99.10%.
InvestingPro Tips highlight that L&T Finance is a prominent player in the Financial Services industry, and it has seen a high return over the last year. The company's net income is expected to grow this year, and analysts predict the company will be profitable. This is in line with the large price uptick over the last six months, with a 6-month price total return of 575.00% as per InvestingPro data. For more insights and tips, readers can visit InvestingPro.
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