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L&T Finance Sells Rs 4,762 Cr Distressed Assets

The decision underscores the company's commitment to maintaining a strong balance sheet

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L&T Finance has taken a strategic step to bolster its financial health by announcing the sale of its distressed-asset loan book valued at Rs 4,762 crore (USD 640 million) to three asset reconstruction companies (ARCs). The decision, unveiled on Wednesday, underscores the company's commitment to maintaining a strong balance sheet.

Phoenix ARC, which enjoys backing from Kotak Mahindra Bank, is expected to be the primary acquirer of the 15 accounts being put up for sale. Initially, L&T Finance had proposed a larger portfolio worth Rs 5,293 crore (USD 713 million) covering 16 accounts. However, only 15 accounts were eventually sold, as ARCs displayed limited interest in exposure related to Delhi-NCR realtor Supertech.

This move is part of L&T Finance's ongoing efforts to cleanse its books and effectively manage financial risks. By divesting these distressed assets, the company seeks to reinforce its financial standing in the market.

According to data from InvestingPro, L&T Finance boasts a market capitalisation of USD 3.73 billion and a price-to-earnings (P/E) ratio of 16.41. In the first quarter of 2024, the company reported revenue of USD 759.09 million and despite a minor dip in revenue growth, it achieved a gross profit of USD 752.23 million, with a gross profit margin of 99.10 per cent.

InvestingPro Tips emphasise L&T Finance's prominence in the Financial Services industry and its strong returns over the past year. Analysts anticipate the company's net income to grow this year, with a positive profit outlook. This aligns with a significant price uptick observed over the last six months, resulting in a 6-month price total return of 575 per cent, as per InvestingPro data. For further insights and tips, readers can refer to InvestingPro.

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L&T Finance distressed assets selloff