According to media reports, L&T could launch the Rs17.5bn IPO of L&T Finance Holdings, within the next six weeks and that there could be pre-IPO placements of Rs4bn for less than 5% stake. L&T Finance and L&T Infra Finance had a combined net-worth of ~Rs30bn at end-FY11 and combined FY11 PAT was ~Rs4.3bn (3-yr CAGR of 39%). The outstanding loan book of the company as at Sep-10 was Rs136bn. The company also has 1) an investment management business and 2) ~5% stakes in Federal and City Union Banks (mkt value ~Rs4.5bn)
Here are some Questions to the Management of L&T Finance
The company has filed 10,050 cases (including 4,205 criminal cases) against various entities. Any particular reason for such high number of cases filed by the company the company? There are 340 cases filed against the company. Why ?
Any particular reason for the high proportion of unsecured loans in your portfolio (~13% of the total loan book) and specifically in the corporate loan portfolio (35% of the loan book)?
Data suggests that concentration on particular segments have led to the success of many NBFCs Shriram Transport [Vehicles] IDFC [Infra], HDFC [ Housing] However, your loan book is scattered over multiple products and segments including microfinancing. What is the Business Strategy here ?
How do you see your competitive positioning in the domestic asset management business post SEBI removing entry load on mutual funds?
What kind of loan growth you are expecting in near term given that ~39% of your loan portfolio comes from the infrastructure segment where demand
could be lower in the near term because of regulatory issues and project delays?
What kind of regulatory changes can impact your business going forward?
