L&T Finance Q3 Results: Profit Surges 18% on Strong Retail Growth

Introduction to Q3 Performance

L&T Finance Ltd (LTF) announced a robust financial performance for the third quarter ending December 31, 2025. The company reported an 18% year-on-year (YoY) growth in its consolidated net profit, which stood at ₹739 crore. This compares to a net profit of ₹626.4 crore in the same quarter of the previous fiscal year. The growth was primarily supported by improved net interest margins, higher fee income, and sustained momentum in its retail lending portfolio.

Financial Highlights

The company's Net Interest Income (NII) saw a healthy increase of 13.4%, rising to ₹2,537 crore from ₹2,237 crore in Q3FY25. A key metric, Net Interest Margin (NIM) combined with fees, improved to 10.41% in the reporting quarter, up from 10.33% a year ago. This improvement was attributed to stable yields on assets and a significant reduction in borrowing costs. The company also noted that the profit figures account for a one-time impact related to the New Labour Code provision.

Operational Efficiency Gains

A standout achievement for the quarter was the company's treasury management, which resulted in the lowest-ever quarterly weighted average cost of borrowing (WACB). The WACB dropped to 7.25%, enhancing profitability and demonstrating efficient capital management. This reduction in funding costs played a crucial role in widening the net interest margins.

Strong Momentum in Retail Lending

L&T Finance continued its strategic pivot towards a retail-focused lending model. Retail disbursements for Q3 FY26 reached an estimated ₹22,690 crore, a substantial 49% increase from the ₹15,210 crore disbursed in the corresponding quarter last year. This strong performance was broad-based, with significant contributions from rural, urban, and SME finance segments.

As a result, the total loan book expanded by 20% YoY, reaching ₹1,14,285 crore by the end of December 2025. The retail component of the loan book grew by 21% to approximately ₹1.11 lakh crore. The company's retailisation strategy remained on track, with retail loans now constituting 97% of the total loan book.

Segment-Wise Loan Book Growth

Performance across various retail segments was strong, reflecting targeted strategies and favorable market conditions.

• Personal Loans: This segment was the fastest-growing, with its loan book expanding by 64% YoY to ₹12,810 crore. The growth was fueled by strategic partnerships with big-tech firms and the expansion of customer acquisition channels.
• Housing and Loan Against Property: The book in this segment grew by a solid 22% YoY, reaching ₹28,682 crore.
• Rural Business Finance: This segment's loan book increased by 10% YoY to ₹28,976 crore, supported by a focus on collection efficiency and positive trends in the rural economy.
• Gold Loans: A relatively new area of focus, the gold loan book reached ₹1,738 crore, with the company concentrating on geographic expansion and increasing disbursements from new branches.

Key Financial Metrics Summary

Management Commentary

Sudipta Roy, Managing Director and CEO of L&T Finance, commented on the results, stating, “Q3FY26 for the financial services sector has been defined by a powerful convergence of favourable macro tailwinds.” He credited factors such as the implementation of GST 2.0, good monsoons, and a series of repo rate cuts for creating a positive environment for consumption and growth, which the company effectively leveraged.

Market Outlook

Analysts view the company's performance as steady, supported by its successful shift to a retail-centric model, which reduces earnings volatility associated with wholesale lending. The strong festival season demand and increased rural spending also contributed to the robust disbursement numbers. Investors will continue to monitor key areas such as asset quality, credit cost management, and the sustainability of margins as the company pursues further growth. The company's focus on technology and branch expansion is expected to support its growth trajectory, though it may keep operating expenses elevated in the short term.

Conclusion

L&T Finance's Q3 FY26 results highlight a period of strong execution and strategic alignment. The 18% profit growth, driven by a booming retail segment and operational efficiencies, positions the company well for the future. The continued focus on retailisation, coupled with favorable macroeconomic conditions, provides a solid foundation for sustained performance in the upcoming quarters.