ICICI Securities has upgraded L&T Finance to 'Buy' with a target price of ₹370 per share. The brokerage highlighted the company's consistent 20% plus profit growth and steady performance in recent quarters. This update follows the company's long-term 'Lakshya 2031' strategic plan aimed at increasing returns and expanding its loan book.
ICICI Securities has revised its stance on Larsen and Toubro Finance (LTF), upgrading the stock from 'Add' to 'Buy' and setting a target price of ₹370. This change in outlook follows the company's strong financial performance, marked by more than 20% year-on-year growth in Profit After Tax (PAT) for the last 14 consecutive quarters.
Financial Performance and Growth Targets
The company has demonstrated operational efficiency, with its Return on Assets (RoA)—a measure of how effectively a company uses its assets to generate profit—consistently holding between 2.1% and 2.5% during this period. Building on this momentum, the management has launched the 'Lakshya 2031' strategic roadmap. This plan focuses on maintaining book growth above 20% while targeting credit costs of under 2%. The company aims to improve its RoA to 300–320 basis points and its Return on Equity (RoE) to 16–18% over the coming years. For context, the company reported an RoA of 237 basis points and an RoE of 11.25% in FY26.
Operational Projects and Future Estimates
To achieve these ambitious targets, the company is implementing specific internal initiatives known as Project Cyclops and Project Nostradamus. These programs are designed to optimize credit costs and improve overall profitability. Based on strong performance in the first quarter of the current fiscal year, ICICI Securities has raised its Earnings Per Share (EPS) forecasts by 2% for FY27 and 4% for FY28. The brokerage now expects the company to achieve a compound annual growth rate of approximately 24% in both earnings and Assets Under Management (AUM) through FY28.
Valuation and Investor Considerations
The brokerage has adjusted its valuation multiple to 2.7 times the expected price-to-book value for FY28, moving up from its previous estimate of 2.5 times for FY27. While these projections reflect optimism regarding the company's strategic plan and recent efficiency gains, investors should monitor the actual execution of these projects. The final impact on the company's share price and financial health will depend on its ability to maintain asset quality while meeting these aggressive growth and profitability targets in a competitive lending environment.