L&T Finance Soars on Morgan Stanley Stake Buy

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Shares of L&T Finance extended their gains on Friday, rising 4.5 per cent to Rs 183.20 per share on the BSE in early morning deals. This marked a significant rally, as the stock had already gained 7.6 per cent in the last two trading sessions. The surge in the stock price came after Morgan Stanley Asia acquired a substantial portion of L&T Finance shares, which were sold by Bain Capital’s affiliates—BC Asia Investment VI and BC Asia Growth Investment—alongside BNP Paribas Financial Markets.

The three entities collectively divested 8.82 crore shares, equivalent to 3.5 per cent of the equity, on Thursday through various block deals on the BSE. The transactions took place at an average price of Rs 170.60 per share. Morgan Stanley’s acquisition amounted to shares worth Rs 576 crore, making up 38.3 per cent of the total block. Axis and Religare acquired 3.9 million shares each, spending Rs 67 crore. Additionally, Larsen & Toubro (L&T), the holding company, also participated in the trade by purchasing an additional 0.50 per cent of shares.

L&T acquired 1.25 crore shares of L&T Finance for Rs 213 crore, thereby increasing its ownership in the company by 0.50 per cent to 66.4 per cent. Other buyers in the transaction included DSP Blackrock, Goldman Sachs (Singapore), Axis MF, and Religare MF.

On Thursday, L&T Finance also announced the termination of the investment agreement between BC Asia Growth Investments, BC Investments VI Limited, and the company in relation to the acquisition of shares. Consequently, Pavninder Singh ceased to be a Director on the Board of the company, effective immediately, as stated in an exchange filing.

L&T Finance’s consolidated net profit rose by 11 per cent year-on-year (YoY) to Rs 554 crore in the quarter ended March 2024 (Q4FY24), driven by healthy net interest margins (NIMs) and fees. In comparison, the company had posted a net profit of Rs 501 crore in Q4FY23. Sequentially, the net profit declined from Rs 640 crore in the third quarter ended December 2023 due to a one-time prudential provision of Rs 175 crore for Securities Receipts (SR) portfolio in Q4FY24.

For the full financial year FY24, net profit rose by 43 per cent to Rs 2,320 crore as against Rs 1,623 crore in FY24. The company’s financial performance has been robust, with a significant increase in net profit. This is likely to have a positive impact on the stock price and investor confidence in the company.