L&T Finance Limited has announced its decision to exercise the call option on Rs 150 crore worth of Subordinated Perpetual Tier-I Debt instruments, originally issued in August 2015. The company plans to redeem these non-convertible debentures (NCDs) on August 26, 2025, following approval from the Reserve Bank of India (RBI) obtained on June 4, 2025.

Key Details of the Redemption

Background and Terms

The perpetual debt instruments were initially issued by L&T Infrastructure Finance Company Limited, which merged with L&T Finance Limited in 2021 as part of a corporate restructuring exercise. These NCDs were issued with a put/call option that could be exercised after a minimum period of 10 years, subject to RBI approval.

Investor Communication

L&T Finance Limited has informed the stock exchanges about this decision and is in the process of notifying the debenture holders. The company stated in its LODR filing, "Accordingly, a letter to the debenture holder(s) is being sent on July 22, 2025 for the redemption of NCDs on August 26, 2025."

Financial Implications

On the redemption date, L&T Finance will pay the principal outstanding along with the annual coupon at 9.90% per annum to the debenture holders. This move is part of the company's debt management strategy and demonstrates its ability to meet its financial obligations.

Recent Corporate Updates

In addition to this significant financial move, L&T Finance has also been actively engaging with its investors. The company recently held an investor and analyst meet on July 21, 2025, to discuss its Q1FY2025-26 financial performance and strategy update. The audio recording of this meeting has been made available on the company's website, reflecting its commitment to transparency and open communication with stakeholders.

This redemption of perpetual debt instruments marks an important financial event for L&T Finance Limited, showcasing the company's proactive approach to managing its capital structure and maintaining investor relations.

L&T Finance Limited (LTF), formerly known as L&T Finance Holdings Limited, has received its first international credit ratings from two major global rating agencies.

S&P Global Ratings Assignment

S&P Global Ratings has assigned LTF a 'BBB-' long-term and 'A-3' short-term issuer credit rating. The outlook on the long-term rating is positive.

Key points from S&P's assessment:

• The ratings reflect S&P's expectation of ongoing and extraordinary support from the L&T group.
• LTF benefits from being part of the broader Larsen & Toubro (L&T) group, with strong brand association.
• L&T is the largest shareholder of LTF, holding a 66.24% stake.
• The rating gets one notch of uplift for potential extraordinary support from L&T.
• S&P views LTF as a strategically important subsidiary of L&T, with an increased contribution to the parent's earnings over the years.
• LTF's strong capitalization helps mitigate its business risks.
• S&P expects LTF's risk profile to improve as the company shifts toward more diversified retail lending.

Fitch Ratings Assignment

Simultaneously, Fitch Ratings has assigned LTF a 'BBB-' Long-Term Foreign- and Local-Currency Issuer Default Rating (IDR). The outlook is stable. Fitch has also assigned a Shareholder Support Rating of 'bbb-'.

Key points from Fitch's assessment:

• The ratings reflect Fitch's expectation that L&T would provide extraordinary support to LTF if required.
• This view is underpinned by LTF's role as a source of the group's strategic growth and diversification.
• LTF's rising contribution to L&T's consolidated profitability demonstrates its value to the group.
• LTF's net profit reached 11.60% of L&T's consolidated net profit.
• Fitch believes the brand sharing between parent and subsidiary would heighten reputational risk for L&T if LTF were to default.
• LTF has one of the country's largest non-bank financial institution (NBFI) franchises, with a diversified loan book of around $11.00 billion.
• The company benefits from experienced management, improving risk frameworks, asset quality and profitability as well as healthy funding access.

LTF's Business Profile

Both rating agencies highlighted several aspects of LTF's business:

• LTF is among the 10 largest finance companies in India.
• It is one of the leading national players in rural business, two-wheelers, and farm equipment finance.
• The company has a granular and diversified loan book, of which 97% is toward the retail segment.
• LTF's loan book stood at INR 977.60 billion.
• Key segments include:

These investment grade ratings from S&P and Fitch are expected to enhance LTF's ability to access international capital markets and diversify its funding sources.