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 redemption is scheduled for June 03, 2026, following approval from the Reserve Bank of India obtained on April 29, 2026.
NCD Details and Background
The NCDs in question 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 150 unsecured, non-convertible instruments with specific characteristics:
Parameter: Details Face Value: ₹10,00,000 per debenture Total Issue Size: ₹15 crores Number of Debentures: 150 Annual Coupon Rate: 9.60% ISIN: INE476M08063 Listing: NSE Wholesale Debt Market Listing Date: June 15, 2016
Call Option Exercise Terms
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. The company has now fulfilled this requirement with RBI approval dated April 29, 2026. The exercise of the call option allows L&T Finance Limited to redeem the debentures before their perpetual maturity.
Payment and Record Date Details
The company will pay both the principal outstanding amount and the annual coupon at 9.60% per annum on the redemption date of June 03, 2026. Key dates for debenture holders include:
Timeline: Date Beneficiary Position Date: April 24, 2026 Notice Date: April 29, 2026 Record Date: May 19, 2026 Redemption Date: June 03, 2026
Regulatory Compliance
The announcement has been made in compliance with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021. The company has also adhered to the SEBI master circular dated January 30, 2026, ensuring full regulatory compliance for the call option exercise.
Impact on Debenture Holders
Debenture holders will receive formal notice regarding the call option exercise, with the company emphasizing 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.
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.
Key Performance Targets: Details Long-term CAGR Target: Over 20% ROE Target: 16-18% FY27 AUM Growth: Over 20% Loan Growth Target: ~20% through 2031 Nomura Target Price: ₹340 Current Rating: Buy
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.
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