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L&T Finance rallies 3%, hits new high; more steam left in the NBFC stock?

L&T Finance share price today L&T Finance (LTF) shares hit a new high of ₹216.75 today, rising 3 per cent on the BSE in Tuesday's intraday trade amid heavy volumes. The stock price of the non-banking finance company (NBFC) surpassed its previous high of ₹214.80, which it touched on July 23, 2025. In the past two trading days, L&T Finance shares have rallied 7 per cent after S&P Global Ratings revised the NBFC's stand-alone credit rating upward by one notch due to likely improvement in its risk adjusted capital (RAC) ratios. S&P Global believes the fresh capital raising or benefits from lower risk weights due to a reduction in economic risk and the sovereign upgrade bodes well for the NBFC. In the past six months, the market price of L&T Finance has zoomed 60 per cent. S&P Global Ratings on L&T Finance S&P Global Ratings expects India's sound economic fundamentals to underpin growth momentum over the next two to three years. In addition, monetary policy settings, it said, have become increasingly conducive to managing inflationary expectations. The rating agency, therefore, upgraded India to 'BBB/Stable/A-2' from 'BBB-/Positive/A-3'. On L&T Finance, the rating agency said LTF will maintain its strengthened capital levels over the next 12-24 months. "We estimate LTF's RAC ratio will be 15 per cent-20 per cent over the next two years, benefiting from the improving economic conditions in India," it added. Notably, L&T Finance's RAC ratio was 19.7 per cent as of March 31, 2025. "The stable rating outlook reflects our expectation that L&T Finance will continue to benefit from being part of the Larsen & Toubro group. The company's linkages with the strong Larsen & Toubro brand should help solidify its market position, and access preferential funding sources while maintaining a good capital position over the next two years," S&P Ratings said in its rationale. Brokerages on L&T Fin, ratings, share price target LT Finance, according to analysts, remains assertive on reduction in credit cost and improving asset quality in the microfinance institution (MFI) space from H2FY26. The MFIN Guardrails 2.0 will help build quality portfolios in the long term, while having limited impact in the short-term. "On an operational level, the franchise is making significant structural changes wherein new credit underwriting engines have been deployed, targeting prime segments which would ultimately improve the overall quality of the portfolio, resulting in lower credit costs. The company has guided for 20 per cent near-term loan growth, which may inch up to ~25 per cent gradually. It remains committed to its target profitability metrics—while NIMs would come off, opex improvements and lower credit costs will help to offset the impact," according to Mirae Asset Sharekhan. The brokerage firm has reiterated its 'Buy' rating on the stock with a revised price target of ₹240. FY26 will be a year of transformation for L&T Finance, transitioning towards the targeted loan mix and implementing Cyclops in Tractors, personal lending, and SME segments, Motilal Oswal Financial Services said. The brokerage expects LTF to deliver a structural improvement in profitability and RoA from FY27 onwards. It, too, has reiterated a 'Buy' rating on the stock with a target price of ₹250 (based on 2x Mar'27E BVPS).