L&T Finance has unveiled its 'Lakshya 2031' strategy, aiming to grow its loan book to ₹3 lakh crore with a 20% annual growth rate. The plan focuses on aggressive retail lending, gold loan expansion, and a significant increase in branch network.
L&T Finance Holdings Ltd. has announced a long-term growth roadmap titled 'Lakshya 2031,' aiming to transform into a major retail-focused financial services provider. The company plans to grow its loan book from the current level of approximately ₹1.3 lakh crore to ₹3 lakh crore by 2031. This expansion target represents a compound annual growth rate of roughly 20%, driven primarily by retail lending across both urban and rural markets.
Financial Targets and Portfolio Mix
Under the new strategy, the company is targeting a return on assets between 3% and 3.2%, with a return on equity in the 16% to 18% range. A key part of this transformation involves shifting the portfolio composition toward more secured lending. L&T Finance aims to adjust its loan mix to 60% secured and 40% unsecured, compared to the current 56% to 44% split. The gold loan segment is set to be a primary growth driver, with management projecting an increase from the current ₹3,000 crore to nearly ₹40,000 crore by 2031.
Branch Network and Digital Strategy
To support this growth, the company plans to increase its physical presence significantly. Between the 2027 and 2029 financial years, L&T Finance intends to open around 500 new branches, bringing the total to approximately 2,000 by 2029. These branches are intended to operate as 'Sampoorna' outlets, providing a variety of financial products. This physical expansion is coupled with a digital-first approach to reach customers more efficiently.
Managing Risk and Regulatory Oversight
As the company scales its retail book, maintaining asset quality remains a critical monitorable for investors. Management reported that while there has been some localized pressure in the MSME segment due to external factors, tighter underwriting standards have helped manage these risks. The company also maintained liquidity levels averaging ₹13,000 crore in the recent quarter as a buffer against potential market volatility. Regarding the regulatory environment, the leadership noted that while the Reserve Bank of India’s strict oversight for large non-banking financial companies is appropriate, the company currently has no immediate plans to pursue a banking license unless the framework changes to favor professionally managed entities without heavy branch-network requirements.
Investors will need to track the company's ability to maintain its targeted credit costs, which are aimed at below 2%, while navigating the competitive retail and gold loan markets. Future updates on the pace of branch rollouts and the actual execution of the gold loan growth target will be important indicators of the strategy's progress.