L&T Finance Q4 FY26: PAT jumps 27%, dividend ₹2.75

What L&T Finance reported for Q4 and FY26

L&T Finance ended FY26 with its highest-ever annual profit after tax (PAT) before a one-time labour code impact booked in Q3 FY26. The company said FY26 PAT stood at ₹3,003 crore, up 14% year-on-year, excluding the post-tax labour code impact of ₹21 crore recorded in Q3 FY26. On a reported basis, consolidated PAT for FY26 was cited at ₹2,981 crore, up 13% year-on-year. For Q4 FY26, the company reported quarterly PAT of ₹807 crore, up 27% year-on-year. Another disclosure put Q4 consolidated net profit at ₹806.63 crore versus ₹636.17 crore in Q4 FY25, a rise of 26.79%.

Profit beat versus estimates

The Q4 FY26 profit print was also described as ahead of the street estimate range of ₹700 crore to ₹780 crore. The quarter was supported by stronger net interest income (NII), better disbursement momentum, and improved asset quality indicators. Profit before tax (PBT) for Q4 FY26 was reported at ₹1,073.92 crore, up 33.32% year-on-year. Total income for Q4 FY26 was reported at ₹4,771.10 crore, up 18.47% year-on-year.

Record retail disbursements powered the quarter

Management attributed the Q4 performance to the highest-ever quarterly retail disbursements of ₹24,107 crore, up 62% year-on-year, with contributions coming from all lines of business. For the full year, L&T Finance reported its highest-ever annual retail disbursements of ₹83,213 crore in FY26, up 39% year-on-year. The company also linked the disbursement momentum to growth in two-wheeler finance, gold loans, personal loans, and rural business finance. These were described as fast-growing, higher-yield retail segments within its portfolio.

Income growth, margins and operating profitability

Alongside disbursements, the company highlighted stronger income momentum. It said total income grew 26% year-on-year and 4% quarter-on-quarter in the quarter, while pre-provision operating profit (PPOP) grew 31% year-on-year. The improvement was attributed to higher NIMs and fees, reported at 10.47%, up 6 basis points sequentially. The company attributed the sequential improvement to yield optimisation, fee improvement, and efficient liability management.

Asset quality improvement: GS3 moves lower

L&T Finance reported an improvement in gross stage-3 (GS3) assets to 2.88% in Q4 FY26 from 3.29% a year ago. The company and market commentary linked the Q4 profit growth to this improvement in portfolio quality and to lower credit costs. Separately, it was stated that credit costs moderated to 2.64% in Q4 FY26, down 19 basis points quarter-on-quarter.

Funding tailwind: borrowing costs at a low

The company also reported its lowest-ever borrowing cost, with weighted average cost of borrowing (WACB) at 7.17% for Q4 FY26 and 7.35% for the full year. Lower funding costs, combined with a higher retail mix and tighter liability management, were presented as contributors to margin and profitability improvement. This trend matters for a retail-focused NBFC because funding cost is a key input into spreads and pricing.

Profitability ratios and retail book scale

For FY26, L&T Finance reported ROA of 2.39% and ROE of 11.33%. Management commentary described these as improving, though still below long-term targets. The retail book was stated to be at ₹1,19,508 crore, up 26% year-on-year. The company also said the retail book crossed the ₹1,00,000 crore mark.

Dividend recommendation for FY26

The board recommended a final dividend of ₹2.75 per equity share for FY26. The dividend recommendation comes alongside a year in which the company reported record retail disbursements and a highest-ever adjusted annual PAT number. Investors typically track dividends in NBFCs as one signal of confidence in earnings durability and capital position, but the announcement itself does not change regulatory capital requirements.

Stock market reaction after results

Following the results, L&T Finance shares were reported to have risen 1.39% to ₹294.50. The move was linked to the year-on-year rise in Q4 consolidated net profit and the increase in total income. Market reaction also reflected the profit beat versus estimates cited in the coverage.

Management commentary: retail growth and AI-led underwriting

CEO Sudipta Roy attributed performance to growth in gold loans, personal loans, microfinance, and two-wheelers, along with lower credit costs. The company also referenced an AI-enhanced digital underwriting platform called Cyclops. As per the disclosure, the platform was associated with positive outcomes in reducing credit costs and improving portfolio quality.

A separate data point linked to Cyclops claimed that the company’s two-wheeler portfolio 30-plus delinquency rate was 2.8% versus an industry average of 7.1% over a 10-month observation window. Management guidance in the same context suggested credit costs could trend lower to a range of 2% to 2.2% by Q4 FY27.

Key reported numbers at a glance

Why these results matter for investors

The headline for L&T Finance’s Q4 FY26 was the combination of profit growth and retail momentum. Record disbursements help expand the earning base, while lower GS3 and moderated credit costs can support earnings stability in consumer and rural segments. Lower borrowing costs can further support spreads, particularly when paired with yield optimisation and fee improvement.

At the same time, the disclosures show profitability metrics are improving but remain a tracked variable, given ROA of 2.39% and ROE of 11.33% for FY26. Investors will likely continue to monitor whether the company sustains asset quality improvement while scaling high-yield products, and whether credit costs move toward the guided 2% to 2.2% range by Q4 FY27.

Conclusion

L&T Finance closed FY26 with a highest-ever adjusted PAT of ₹3,003 crore, supported by record retail disbursements, better asset quality, and lower borrowing costs. In Q4 FY26, profit rose to about ₹807 crore, alongside a final dividend recommendation of ₹2.75 per share. The next set of watch points, based on the stated commentary, will be progress on credit cost moderation, continued retail-led disbursement momentum, and delivery against FY27 profitability improvement targets.