L&T Finance Q1 net profit up 20% at Rs 144.9 cr

However,the non-banking finance company witnessed an increase in bad asset during the quarter with the gross NPA rising to 2.54 per cent compared to 1.63 reported a year earlier.

Giving the rationale behind the profit growth,the company said,”the growth in PAT has been on account of improvement in margins,offset by an increase in credit costs. The reduction in losses in the investment management business and positive contribution from the microfinance business also aided profit growth.”

On the disbursement front,the NBFC,which is looking at entering the banking fray,witnessed a sound growth with loans and advances growing by 31.1 per cent year on year to Rs 34,337.2 crore during the quarter.

“Disbursement trends continue to be similar to the last quarter with construction equipment and commercial vehicle segments witnessing de-growth,while the rural products finance and infrastructure financing for the transportation sector showed healthy growth during this period,” the company said.

The company also said the disbursements reflect the general slowdown in the economy,absence of new capex cycle,stretched working capital cycles of corporates amidst a vibrant rural economy.

Net NPAs of the company increased to 1.67 per cent from 1.17 per cent.

“The increase in gross NPA has been contributed primarily by corporate loans in infrastructure and SME sectors,as a result of stress in the economic environment,” it said.

Giving a cautious outlook,the company said the macroeconomic environment remains uncertain with limited visibility on signs of improvement in the business environment.

It,however,said the margins are expected to be stable or witness a marginal improvement on the possibility of monetary easing in the second half of this fiscal.

“Though we continue to be cautious in credit selection and asset monitoring,concerns on asset quality remain. Improvement in the overall business environment is expected to enable stabilisation of asset quality,” the company said.