L&T Finance Ltd: ₹500 Crore Debt Raised Through NCD Issuance

The company has allotted 50,000 NCDs worth ₹500 crore, carrying a coupon rate of 7.7942%.

Details of the Issuance

L&T Finance has completed a debt fundraising by allotting 50,000 senior, secured, rated, listed, redeemable, non-convertible debentures (NCDs) through private placement, totaling ₹500 crore. Each NCD has a face value of ₹1 lakh. The debentures mature on June 27, 2031, with a coupon rate of 7.7942% annually. The allotment date was April 21, 2026. This issuance is a standard debt capital raise and does not affect the company's equity structure.

Impact for L&T Finance and Investors

The raised funds will bolster L&T Finance's liquidity for operations and growth without diluting shareholder equity. For investors, these NCDs offer a fixed-income opportunity with a set maturity and coupon.

Company Background and Context

L&T Finance is a major non-banking financial company (NBFC) in India, focused on retail lending in both rural and urban areas. Its product range includes personal loans, two-wheeler finance, home loans, and SME loans. The company actively manages its debt. In October 2025, L&T Finance issued NCDs totaling ₹1,050 crore at a 7.219% coupon. Its parent, Larsen & Toubro (L&T), offers strong backing, reflected in credit ratings like 'BBB-' from S&P Global (Outlook Positive) and 'IND AAA' from India Ratings. L&T Finance underwent a major structural change in December 2023, merging its subsidiaries into a single retail NBFC. This aligns with its 'Lakshya 2026' plan aiming for over 95% retail loan book share.

Key Outcomes of the Debt Issuance

• Enhanced Liquidity: The ₹500 crore infusion strengthens L&T Finance's funding base.
• No Equity Dilution: As debt, this issuance does not alter existing shareholders' stakes.
• Diversified Funding: This adds to the company's various debt sources.
• Predictable Investor Returns: The NCDs provide a fixed income stream until maturity.

Potential Risks

According to the filing, a default on interest or principal payments for over three months past the due date will incur an additional 2% annual interest on the overdue amount.

Peer Comparison

L&T Finance's 7.7942% coupon rate is competitive among NBFCs. For example, Bajaj Finance offered 7.60% on similar NCDs in March 2025, and L&T Finance's own October 2025 issuance was at 7.219%. Other peers, such as Indiabulls Housing Finance, have offered higher rates, reaching up to 10.75% in early 2024.

Financial Health Metrics

• L&T Finance's gearing (borrowings to tangible net worth) stood at 3.97x as of March 31, 2025.
• The company reported a Return on Average Managed Assets (RoMA) of 2.4% for FY2025.

Future Focus Areas

• Listing on NSE NTRP: The allotted debentures are expected to be listed on the National Stock Exchange's New Debt Market (NTRP) platform.
• Use of Funds: Investors will monitor how effectively these funds are deployed to support L&T Finance's retail lending growth.
• Future Fundraising: Watch for any further debt or equity issuance plans announced by the company.
• Credit Ratings: Continued monitoring of L&T Finance's credit ratings and outlooks from agencies like ICRA, CARE, and S&P Global.