L&T Finance Holdings (LTFH) posted a 86.63 per cent drop in profit before tax (PBT) at Rs 99.26 crore for the first quarter (Q1) ended June 2020 (Q1FY21) on a rise in provisions and impairment costs. It had posted a PBT of 742.63 crore in the quarter ended June 2019 (Q1FY20).
Its net profit for the quarter under review declined to Rs 147.44 crore, from Rs 549.42 crore in Q1FY20. The total income declined to Rs 3,397.53 crore in Q1FY21 from Rs 3,689.50 crore in Q1FY20. The PBT and net profit figures are on consolidated basis for the listed company, which is the holding entity.
The finance company‘s stock closed 1.73 per cent lower at 59.8 per share on the BSE.
The impairment on financial instruments rose to 943.52 crore in Q1FY21, from 530.42 crore in Q1FY20.
Referring to the impact of the Covid-19 pandemic, the company's managing director and chief executive officer Dinanath Dubhashi said that the company created additional provisions of Rs 577 crore, out of which Rs 277 crore were for the impact of Covid-19 in Q1FY21. The macro prudential provisions for rural portfolio amounted to Rs 300 crore in Q1FY21.
The provision coverage ratio improved to 69 per cent in June 2020 from 58 per cent a year ago.
The asset quality of finance firm improved during the fourth quarter. The gross NPAs declined to 5.24 per cent in Q1FY21, from 5.72 per cent in Q1FY20. The net NPAs were at 1.71 per cent in June, down from 2.48 per cent in June 2019.
The advances shrank by 1 per cent YoY to Rs 98,879 crore at end of June 2020 from Rs 99,904 crore in June 2019. The loan book in rural business rose 6 per cent to Rs 27,476 crore in June 2020 from Rs 25,845 crore a year ago.
Dubhashi said the finance company was positive about the rural finance business while being watchful of infrastructure and real estate exposures.
The company's capital adequacy ratio stood at 21.18 per cent as of June 30, with tier I at 17.23 per cent. The company was internally evaluating options for raising additional capital to support organic and inorganic growth, Dubhashi added.