L&T Finance Limited delivered exceptional financial performance in Q3FY26, achieving its highest ever quarterly core PAT of ₹760 Cr, representing a 21% year-on-year growth. After accounting for a one-time exceptional impact of ₹29 Cr related to the New Labour Code, the company reported PAT of ₹739 Cr, marking an 18% YoY increase. This strong profitability was supported by record retail disbursements of ₹22,701 Cr, up 49% YoY, demonstrating the company's robust business momentum across all segments.
Financial Performance Highlights
The company's financial metrics showed consistent improvement across key parameters during Q3FY26:
| Metric |
Q3FY26 |
Growth (YoY) |
| Core PAT (before exceptional items) |
₹760 Cr |
+21% |
| PAT (after exceptional items) |
₹739 Cr |
+18% |
| Retail Disbursements |
₹22,701 Cr |
+49% |
| Retail Book Size |
₹1,11,990 Cr |
+21% |
| Consolidated Book Size |
₹1,14,285 Cr |
+20% |
| RoA (after exceptional items) |
2.31% |
+4 bps |
| RoA (before exceptional items) |
2.37% |
+10 bps |
The company achieved its lowest ever Weighted Average Cost of Borrowing (WACB) at 7.25%, contributing to a 19 bps sequential improvement in Net Interest Margins plus Fees to 10.41% from 10.22% in Q2FY26. Total income grew 18% YoY and 8.4% QoQ, while operating costs increased only 7% YoY, leading to PPOP growth of 25%.
Credit Quality and Risk Management
L&T Finance demonstrated significant improvement in asset quality metrics during the quarter. Credit costs moderated from 2.98% in Q2FY26 to 2.83% in Q3FY26, representing a 15 bps QoQ reduction and 8 bps YoY improvement. Excluding a one-time charge of ₹23 Cr on co-borrower provisions, the core credit cost from operations came in at 2.74%, showing a 24 bps reduction on QoQ basis.
The microfinance portfolio showed sustained recovery with collection efficiency improvements:
| Collection Efficiency Metric |
Performance |
| Karnataka Monthly Collection Efficiency |
99.56% (vs 99.18% in Sep'25) |
| Pan India '0 DPD' Collection Efficiency |
99.70% (vs 99.50% in Q2FY26) |
| Provision Coverage Ratio |
72% (vs 70% in Q2FY26) |
The company maintained no utilization of macro-prudential provisions during the quarter, indicating the return of the Rural Business Finance vertical to near-normal credit cost trajectory.
Business Segment Performance
All business segments delivered strong growth during Q3FY26, supported by favorable macroeconomic conditions and GST 2.0 reforms:
Rural Business Finance
- Disbursements: ₹6,740 Cr (up 47% YoY, 7% QoQ)
- Book Size: ₹28,976 Cr (up 10% YoY, 6% QoQ)
Farmer Finance
- Disbursements: ₹2,783 Cr (up 12% YoY, 68% QoQ)
- Book Size: ₹16,671 Cr (up 11% YoY, 5% QoQ)
Urban Finance Segments
| Business |
Disbursements |
YoY Growth |
Book Size |
YoY Growth |
| Two-Wheeler Finance |
₹3,217 Cr |
+33% |
₹13,913 Cr |
+10% |
| Personal Loans |
₹3,574 Cr |
+118% |
₹12,810 Cr |
+64% |
| Home Loans & LAP |
₹2,879 Cr |
+16% |
₹28,682 Cr |
+22% |
| SME Finance |
₹1,550 Cr |
+24% |
₹7,946 Cr |
+37% |
| Gold Finance |
₹1,408 Cr |
+43% QoQ |
₹1,738 Cr |
+18% QoQ |
Technology and Digital Initiatives
The company continued advancing its digital transformation through multiple AI-driven projects. Project Cyclops, the advanced underwriting engine, showed excellent results with Net Non-Starter rates improving significantly:
- Two-Wheeler Portfolio: NNS reduced from 2.36% in Dec'24 to 0.41% in Dec'25
- Farm Business: NNS reduced from ~1.50% in Dec'24 to ~0.4% in Dec'25
Project Nostradamus, an AI-driven automated real-time portfolio management engine, went live in beta mode for Two-Wheeler Finance. The company also launched Project Helios and Project Orion, with Helios processing 5,000+ cases and achieving 30% reduction in turnaround time in the SME business.
Strategic Expansion and Outlook
L&T Finance expanded its Gold Loan business significantly, adding 64 new branches during the quarter and planning to establish 330+ gold loan branches by end of FY26. The company onboarded 7.0 lakh new customers, up from 5.9 lakh in the previous quarter, demonstrating strong customer acquisition momentum.
Managing Director Sudipta Roy expressed confidence in sustaining the business momentum through Q4FY26 and into FY27, supported by the normalization of the Rural Business Finance business and continued benefits from technology initiatives. The company remains committed to achieving its Lakshya 2026 target of 2.8%-3.0% RoA by Q4FY27, with plans to announce Lakshya 31 goals in the April quarter results.
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