L&T Finance Q3 Update: Retail Loans Surge 49% in FY26

Introduction

L&T Finance has released a strong business update for the third quarter of fiscal year 2026, showcasing significant momentum in its retail lending operations. The non-banking financial company (NBFC) reported a substantial 49% year-on-year increase in retail disbursements, signaling robust execution of its strategic pivot towards a retail-focused portfolio. This performance underscores the company's ability to capture growing credit demand across key consumer segments and has been received positively by the market, capping a year of remarkable stock performance.

Record Disbursements in Q3

For the quarter ending December 31, 2025, L&T Finance's retail disbursements reached an estimated ₹22,690 crore. This figure represents a remarkable 49% surge compared to the same period in the previous fiscal year. The growth highlights an acceleration in loan origination and reflects strong underlying demand in the market. This performance builds on the momentum seen in the second quarter, where the company had already achieved its highest-ever quarterly disbursements of nearly ₹18,900 crore.

Expansion of the Retail Loan Book

The company's total retail loan book expanded to approximately ₹1.11 lakh crore as of the end of December 2025. This marks a significant 21% year-on-year growth from ₹92,224 crore recorded in December 2024. This consistent expansion is a direct result of the company's strategic decision to increase its focus on retail assets, a plan outlined in its 'Lakshya 2026' roadmap. The retailisation of the book remained high at 97% during the quarter, indicating a continued and successful shift away from wholesale exposures.

Broad-Based Growth Across Segments

The growth reported in the third quarter was not confined to a single segment but was broad-based. L&T Finance saw healthy traction across its diverse portfolio, which includes rural finance, urban finance, SME loans, and farmer finance. This diversified growth model provides resilience and reduces dependency on any single vertical. The strong performance in personal loans, which saw a 114% YoY disbursement growth in the preceding quarter, is a key example of the company's ability to scale new business lines effectively, often driven by digital partnerships.

Strategic Initiatives and Technological Integration

Underpinning this growth is L&T Finance's investment in technology and digital infrastructure. The company's AI-powered underwriting engine, 'Project Cyclops', has been instrumental in improving portfolio quality and efficiency. By automating underwriting for segments like two-wheeler, farm equipment, and SME loans, the engine has helped reduce risks at the point of origination. Furthermore, strategic partnerships with major technology platforms such as Amazon Pay, Google Pay, Cred, and PhonePe have significantly boosted the origination of personal loans, creating a powerful digital distribution channel.

Key Financial Metrics

The company's consistent performance is reflected in its key financial indicators. While the full Q3 results are awaited, the business update points towards a healthy operational quarter.

Market Reaction and Investor Confidence

Investors have responded favorably to L&T Finance's strategic direction and consistent execution. Ahead of the Q3 business update, the company's shares closed at ₹320.50 on the National Stock Exchange. The stock's performance throughout 2025 has been exceptional, delivering a surge of 133%. This marks the strongest annual return for the company since its market debut in 2011, reflecting strong investor confidence in its transformation into a retail-centric financial institution. The sustained growth in its loan book and disbursements validates the management's strategy and its ability to execute it effectively.

Analysis and Outlook

The Q3 FY26 business update confirms that L&T Finance's strategic pivot is yielding significant results. The impressive 49% growth in disbursements indicates that the company is not only meeting but exceeding its growth targets. By successfully de-risking its portfolio through retailisation, L&T Finance is building a more stable and predictable earnings model. The focus on technology-led underwriting and digital partnerships is creating a competitive advantage that allows for scalable and profitable growth. The company maintains its guidance for 20-25% AUM growth and is on track to achieve its medium-term goals, including improving its Return on Assets (RoA). The strong performance sets a positive tone for the remainder of the fiscal year.

Conclusion

L&T Finance's Q3 FY26 update demonstrates robust operational strength and successful strategic execution. The significant jump in retail disbursements and the steady expansion of the loan book position the company for sustained growth. Backed by technological innovation and strong market sentiment, L&T Finance continues to solidify its position as a leading retail-focused NBFC in India. The full financial results for the quarter will be watched closely by investors for further details on profitability and asset quality.