Understanding the Current Rating
The 'Hold' rating assigned to L&T Finance Ltd indicates a balanced outlook where the stock is expected to perform in line with the broader market or sector averages. This rating suggests that investors should maintain their current positions without aggressively buying or selling, as the stock exhibits a mix of strengths and challenges. The rating was established on 14 May 2025, following a significant improvement in the company’s overall Mojo Score, which rose by 19 points from 45 to 64, signalling a shift from a 'Sell' to a 'Hold' stance.
Quality Assessment
As of 23 February 2026, L&T Finance Ltd maintains a 'good' quality grade. This reflects the company’s solid operational performance and consistent profitability. The latest quarterly results for December 2025 highlight record figures, with PBDIT reaching ₹2,778.18 crore, PAT at ₹759.82 crore, and net sales at ₹4,578.27 crore – all the highest recorded to date. These figures underscore the company’s ability to generate strong earnings and maintain operational efficiency despite a challenging macroeconomic environment.
Valuation Perspective
Currently, the stock is considered 'very expensive' based on valuation metrics. Trading at a price-to-book value of 2.8, L&T Finance Ltd commands a premium relative to its peers and its own historical averages. The company’s return on equity (ROE) stands at 10.2%, which, while respectable, does not fully justify the elevated valuation multiples. Investors should note that the price-to-earnings-to-growth (PEG) ratio is 2.6, indicating that the stock’s price growth has outpaced earnings growth. This premium valuation suggests cautious optimism, as the market prices in expectations of sustained earnings momentum and strategic growth initiatives.
Financial Trend and Returns
The financial trend for L&T Finance Ltd is positive, with the company demonstrating steady growth in profitability and market performance. Over the past year, the stock has delivered an impressive return of 121.36%, significantly outperforming the broader BSE500 index. However, underlying sales and operating profit growth have been modest, with net sales increasing at an annual rate of 4.90% and operating profit at 4.36%. This disparity between stock price appreciation and fundamental growth highlights the importance of monitoring future earnings sustainability.
Technical Outlook
From a technical standpoint, the stock exhibits a bullish trend. Recent price movements show positive momentum, with gains of 0.94% on the latest trading day, 2.21% over the past week, and 4.18% in the last month. The six-month return is particularly strong at 35.00%, reinforcing the stock’s attractiveness to momentum investors. This technical strength supports the 'Hold' rating by suggesting that while the stock is performing well, it may be approaching levels where valuation concerns warrant caution.
Institutional Interest and Market Position
Institutional investors hold a significant stake in L&T Finance Ltd, currently at 21.99%, with an increase of 1.26% over the previous quarter. This heightened institutional interest often reflects confidence in the company’s long-term prospects and governance standards. The stock’s midcap status within the Non-Banking Financial Company (NBFC) sector positions it well to capitalise on growth opportunities in India’s expanding financial services market.
Summary for Investors
In summary, L&T Finance Ltd’s 'Hold' rating by MarketsMOJO reflects a nuanced view balancing strong operational results and market performance against elevated valuation levels and moderate fundamental growth. Investors should consider maintaining their holdings while closely monitoring quarterly earnings and sector developments. The current rating suggests that while the stock is not an immediate buy, it remains a viable investment option for those seeking exposure to the NBFC sector with a moderate risk appetite.
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Performance Metrics in Detail
Examining the stock’s recent performance, as of 23 February 2026, L&T Finance Ltd has shown consistent gains across multiple time frames. The one-day increase of 0.94% and one-week rise of 2.21% indicate short-term strength. Over the past three months, the stock has appreciated by 4.12%, while the six-month return is a robust 35.00%. Despite a year-to-date decline of 4.94%, the one-year return remains exceptionally strong at 121.36%, underscoring the stock’s resilience and appeal to growth-oriented investors.
Operational Growth and Profitability
The company’s operational growth, while positive, has been relatively modest. Net sales have expanded at an annualised rate of 4.90%, and operating profit has grown at 4.36% annually. These figures suggest steady but unspectacular expansion. However, the December 2025 quarter results demonstrate the company’s capacity to deliver peak performance, with record-high PBDIT and PAT figures. This indicates effective cost management and revenue generation capabilities, which are critical for sustaining profitability in the NBFC sector.
Valuation Considerations
Investors should be mindful of the stock’s valuation, which is currently considered very expensive. The price-to-book ratio of 2.8 places L&T Finance Ltd at a premium compared to its sector peers. This elevated valuation is partly justified by the company’s strong return on equity of 10.2%, but it also reflects market expectations for continued earnings growth. The PEG ratio of 2.6 suggests that the stock price has outpaced earnings growth, signalling that investors are paying a premium for future potential rather than current fundamentals alone.
Institutional Confidence and Market Positioning
Institutional investors’ stake of 21.99% and its recent increase highlight confidence in the company’s governance and growth prospects. Such investors typically conduct thorough due diligence, and their growing presence can be a positive signal for retail investors. L&T Finance Ltd’s position as a midcap NBFC allows it to benefit from India’s expanding credit market, though it also faces competition and regulatory challenges inherent to the sector.
Technical Analysis and Market Sentiment
The stock’s bullish technical grade reflects positive market sentiment and momentum. The steady price appreciation over various time frames suggests that the stock remains attractive to traders and investors alike. This technical strength supports the 'Hold' rating by indicating that while the stock is performing well, investors should remain cautious given the premium valuation and moderate fundamental growth.
Conclusion
Overall, L&T Finance Ltd’s current 'Hold' rating by MarketsMOJO is a reflection of its solid operational performance, positive financial trends, and strong technical momentum, balanced against a high valuation and moderate growth rates. Investors are advised to maintain their positions and monitor upcoming earnings reports and sector developments closely. The stock remains a viable option for those seeking exposure to the NBFC sector with a balanced risk-return profile.
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