L&T Finance Limited has announced its decision to exercise the call option for redemption of Subordinated Perpetual Upper Tier-II Debt Non-Convertible Debentures (NCDs) worth ₹15 crores. The company has formally notified stock exchanges and debenture holders about the redemption scheduled for June 03, 2026, following approval from the Reserve Bank of India obtained on April 29, 2026.

Regulatory Compliance and Notification

The announcement has been made pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, read with SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021, and SEBI master circular dated January 30, 2026. The company has formally communicated with both NSE and BSE, providing comprehensive documentation including official letters to debenture holders.

NCD Specifications and Background

The NCDs were originally issued by L&T Housing Finance Limited through an Information Memorandum dated June 02, 2016. Following the corporate restructuring exercise in 2021, L&T Housing Finance Limited merged with L&T Finance Limited. The debentures comprise specific characteristics as detailed below:

Call Option Exercise Framework

The NCDs were issued with a put/call option exercisable after a minimum period of 10 years, subject to prior approval from the Reserve Bank of India. In accordance with the terms of the NCDs and RBI approval dated April 29, 2026, the company has decided to exercise the call option. The exercise allows L&T Finance Limited to redeem the debentures before their perpetual maturity.

Payment Schedule and Key Dates

The company will pay both the principal outstanding amount and the annual coupon at 9.60% per annum on the redemption date. The formal timeline for the redemption process has been established with specific dates for debenture holders:

Impact on Stakeholders

Debenture holders have received formal notice regarding the call option exercise as per the beneficiary position dated April 24, 2026. The company has emphasized that it will not be responsible for any claims related to securities sold or transferred after the record date of May 19, 2026. The redemption will conclude the investment for current holders, providing them with the principal amount plus accrued coupon payments at 9.60% per annum.

L&T Finance has outlined an ambitious long-term growth strategy, targeting over 20% compound annual growth rate (CAGR) and return on equity (ROE) of 16-18%, according to recent concall updates. The company has further strengthened its growth outlook by anticipating Asset Under Management (AUM) to increase by over 20% in FY27, reinforcing its strategic roadmap built on strong fourth-quarter performance and positive analyst sentiment from Nomura.

Nomura Maintains Strong Buy Rating

Nomura has reaffirmed its Buy rating on L&T Finance with a target price of ₹340, following the company's fourth-quarter performance that met analyst expectations. The brokerage's assessment comes amid several positive developments in the financial services company's operations, particularly noting improved credit costs and strong execution in unsecured lending.

Ambitious Growth Strategy Through 2031

The management has set bold long-term targets as part of its growth strategy through 2031. The company aims to achieve over 20% CAGR while maintaining ROE in the range of 16-18%, reflecting confidence in its business model and market opportunities in the financial services sector. The latest projection of over 20% AUM growth in FY27 demonstrates the company's commitment to expanding its asset base significantly.

Strong Q4 Performance and Operational Highlights

The company's Q4 profit performance was in line with market expectations, according to Nomura's analysis. A significant highlight was the improvement in credit costs, which indicates better asset quality management and risk control measures. Nomura particularly noted L&T Finance's strong execution capabilities in the unsecured lending segment, demonstrating the company's ability to effectively manage and grow its unsecured loan portfolio.

Market Outlook and Key Watchpoints

Despite the overall positive assessment and ambitious targets, Nomura has identified the near-term credit cost outlook for FY27 as a key watchpoint. This suggests that while the current trajectory appears promising, investors and analysts will need to monitor credit cost trends closely in the coming fiscal years to ensure sustainable growth and achievement of the targeted ROE levels. The projected AUM growth of over 20% in FY27 adds another dimension to the company's expansion plans, indicating strong business momentum.