L&T Finance Limited has outlined a significant funding and growth roadmap for FY27, with its board approving the issuance of cumulative compulsorily redeemable non-convertible preference shares (NCPs) worth up to ₹6,012 crore. The decision, disclosed through a recent exchange filing, is subject to shareholder approval and forms a key part of the company’s broader capital-raising strategy.
Alongside this, the company has also received board approval to raise funds via non-convertible debentures (NCDs) in multiple tranches. The total borrowing limit has been capped at ₹1.23 lakh crore within already sanctioned thresholds, indicating a structured approach to managing liquidity and supporting future expansion.
Capital Raising Strategy for FY27
The proposed issuance of preference shares highlights L&T Finance’s intent to strengthen its capital base while maintaining financial flexibility. These instruments, being non-convertible and redeemable, allow the company to raise long-term funds without diluting equity ownership.
In addition, the approval to raise funds through NCDs provides the company with the ability to tap debt markets efficiently. By staggering issuances across multiple tranches, L&T Finance can align its funding costs with prevailing market conditions and liquidity requirements.
This dual approach—combining preference shares and debentures—demonstrates a diversified funding strategy aimed at supporting business growth while maintaining balance sheet stability.
Q4FY26 Financial Performance
L&T Finance reported a solid financial performance for the quarter ended March 2026. Consolidated profit after tax (PAT) stood at ₹807 crore, reflecting a 27% increase compared to the same period last year.
The growth in profitability was primarily driven by strong traction in retail lending segments and stable credit performance. The company’s focus on granular retail loans appears to be yielding consistent results, contributing to improved earnings visibility.
For the full financial year FY26, PAT reached ₹2,981 crore, marking a 13% year-on-year increase. When adjusted for a one-time impact related to labour code provisions, the annual profit stood slightly higher at ₹3,003 crore.
Retail Lending Drives Growth
Retail lending continued to be the primary growth engine for the company. During the March quarter, retail disbursements surged 62% year-on-year to ₹24,107 crore.
This growth was led by segments such as two-wheeler financing, gold loans, and personal loans, reflecting strong demand across consumer credit categories.
The retail loan book expanded 26% year-on-year to ₹1.19 lakh crore by the end of March 2026. Notably, retail loans now account for approximately 98% of the company’s total loan portfolio, underscoring a near-complete transition away from wholesale lending.
On a consolidated basis, the overall loan book stood at ₹1.21 lakh crore, indicating steady expansion in line with the company’s strategic focus.
Margins and Asset Quality Trends
L&T Finance reported stable margins during the quarter, with net interest margin (NIM) plus fees at 10.47%, slightly higher than 10.41% in the previous quarter. This indicates consistent earning efficiency despite evolving market conditions.
Asset quality metrics also showed improvement. Credit costs declined to 2.64% from 2.83% on a sequential basis, while remaining at 2.54% for the full year.
Slippages, which indicate fresh additions to non-performing assets, dropped significantly to ₹402 crore from ₹600 crore in the December quarter. This reduction suggests better risk management and improved borrower behaviour.
Meanwhile, the wholesale loan book continued its downward trajectory, shrinking 14% year-on-year to ₹2,220 crore. This aligns with the company’s strategy to reduce exposure to large-ticket corporate lending.
Net security receipts also declined by 18% to ₹4,808 crore, reflecting ongoing efforts to streamline legacy assets.
Strategic and Operational Developments
During the quarter, L&T Finance undertook its annual update of the expected credit loss (ECL) model. This exercise led to certain provisioning adjustments, although it did not impact the profit and loss statement.
The company is also exploring new avenues for growth in the digital payments ecosystem. The board has approved entry into the prepaid instruments (PPI) segment, which includes digital wallets and prepaid cards.
Additionally, L&T Finance plans to operate as a third-party application provider (TPAP), subject to regulatory approvals from the Reserve Bank of India and the National Payments Corporation of India. This move reflects an effort to diversify revenue streams and strengthen its presence in the digital financial services space.
Dividend and Leadership Updates
The board has recommended a dividend of ₹2.75 per equity share for FY26, reflecting the company’s consistent earnings performance and capital position.
In terms of leadership, Sachinn Joshi and Raju Dodti have been appointed as Whole-time Directors for fixed terms. These appointments are expected to support the company’s ongoing transformation and growth initiatives.
Market Performance Snapshot
As of April 27, 2026, the share price of L&T Finance Limited was trading at ₹289.43, marginally lower by 0.21% compared to the previous closing price. The movement reflects routine market fluctuations amid broader sector trends.
Summary
L&T Finance Limited has approved a ₹6,012 crore preference share issuance as part of its FY27 funding strategy, alongside plans to raise capital through non-convertible debentures. The company reported strong financial performance in FY26, driven by robust growth in retail lending and stable asset quality metrics.
With retail loans forming the bulk of its portfolio and continued expansion in digital financial services, L&T Finance is aligning its operations with evolving market dynamics. The combination of capital strengthening, operational efficiency, and strategic diversification reflects a structured approach to sustaining growth momentum.
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