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Fast disbursement growth at NBFCs has historically coincided with tighter underwriting later, once asset quality concerns surface. Morgan Stanley flagged this risk directly, stating that despite 28% retail loan growth, L&T Finance’s return on equity may take two and a half to three years to reach 15%.
LoansJagat's own tracking of official data adds context here. Out of the gold-backed lending segment LoansJagat covers, NBFC-issued gold loans carried a default rate of 2.14% as of March 2025, compared with 0.22% for bank-issued gold loans, a
ccording to a Lok Sabha reply tabled on March 15, 2025. This gap matters for anyone comparing L&T Finance’s Gold Finance segment against bank alternatives before borrowing.
Brokerage views on this update are split, and both sides cite the same numbers to reach different conclusions. Citi had kept a Buy recommendation on L&T Finance with a target price of ₹340, citing ₹23,800 crore retail disbursals along with 6.6% quarter-over-quarter growth in retail AUM. Another noteworthy point from Citi’s note was that the company Urban Finance had grown 57% year-over-year, which is indicative of increasing penetration in cities.
On the other hand, Morgan Stanley was more conservative in its approach and remained Underweight on the stock with a target of ₹150. The brokerage acknowledged the 28% retail loan growth and 36% disbursement growth but flagged margin pressure and asset quality as concerns that could delay return on equity improvement by two to three years. This divide shows that strong headline growth alone does not settle the debate on the stock's near-term direction.
The firm’s own historical performance can provide some insight into the sustainability of its current level of return. The Q4FY26 financial statements submitted to the exchanges in May 2026 reported retail disbursements of ₹24,107 crore and a Gross Stage 3 ratio of 2.88% against 3.29% in Q4FY25. Credit costs in the quarter were at 2.64% against 2.83% in the previous quarter. This seems to indicate that despite growing disbursement numbers, the firm continues to manage its asset quality.
The return on assets improved to 2.40% in Q4FY26 from 2.22% in the corresponding quarter last year. Assuming that the trend continues in Q1FY27, it could help sustain Citi’s growth thesis versus Morgan Stanley’s skepticism on returns.
The stock market has not failed to react to this positive momentum. L&T Finance made another all-time 52-week high price of ₹330.9 on July 6, 2026, maintaining its winning streak of 8 days and making its stock rise by 14.25%. The company gave a return of 59.03% in the last one year compared to the Sensex, which had a fall of 6.34% to open at a 52-week low of ₹194.4.
L&T Finance will release its financial results for Q1FY27 along with an earnings call on July 13, 2026, at 11:00 am IST. Management is expected to discuss net interest margins and credit cost trends in the call. Till then, the latest July 4, 2026, announcement provides a provisional but comprehensive outlook on what looks like the expansion of the business model. With disbursements rising by 36% and the loan book reaching the mark of ₹1.28 lakh crore, L&T Finance looks set to continue the trend established in FY26 when it made total retail disbursements of ₹83,213 crore.
What do Citi and Morgan Stanley say about L&T Finance shares after the Q1FY27 update?
Citi kept its Buy rating and ₹340 target, pointing to 57% growth in Urban Finance and a 6.6% quarter-on-quarter rise in retail assets. Morgan Stanley held Underweight at ₹150, arguing 28% loan growth alone won't fix return ratios anytime soon.
What drove L&T Finance stock to ₹330.9, and what should investors watch next?
The stock climbed from a 52-week low of ₹194.4 to ₹330.9, a 59.03% one-year return, gathering pace after the Q1FY27 disbursement numbers came out. The next real test is the July 13, 2026 earnings call, where margin and asset quality guidance will show whether the rally holds up.
57%
