Robust Performance Metrics and Market Outperformance
Over the last 12 months, L&T Finance Ltd has generated returns exceeding 125%, a figure that dwarfs the broader market benchmarks such as the BSE500, which returned 14.40% in the same period. Even over longer horizons, the company’s performance remains impressive, with a three-year return of 238.79% compared to the Sensex’s 38.32%, and a ten-year return of 491.13% against the Sensex’s 255.22%. These figures underscore the company’s consistent ability to create shareholder value over time.
Despite a slight pullback of 1.12% on 26 Feb 2026, compared to the Sensex’s marginal decline of 0.03%, the stock has shown resilience with positive weekly and monthly returns of 1.85% and 4.00% respectively, outperforming the Sensex’s negative weekly return of -0.30% and monthly gain of 0.87%. This relative strength highlights investor confidence in the company’s fundamentals amid broader market volatility.
Financial Strength and Operational Excellence
L&T Finance Ltd’s recent quarterly results have been a key catalyst for its upgraded rating from Hold to Buy by MarketsMOJO on 26 Feb 2026, reflecting improved business prospects. The company reported its highest-ever quarterly PBDIT of ₹2,778.18 crores and net sales of ₹4,578.27 crores, signalling robust operational execution. Profit before tax excluding other income (PBT less OI) also reached a record ₹1,017.46 crores, underscoring strong core profitability.
These financial milestones have been instrumental in boosting investor sentiment and underpinning the stock’s premium valuation. The company currently trades at a price-to-earnings (P/E) ratio of 26.52, above the industry average of 22.29, reflecting market expectations of sustained growth. However, this premium valuation is tempered by a price-to-book (P/B) ratio of 2.8 and a return on equity (ROE) of 10.2%, which suggest room for improvement in capital efficiency.
Built for the long haul! Consecutive quarters of strong growth landed this Small Cap from Chemicals on our Reliable Performers list. Sustainable gains are clearly ahead!
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- - Multi-quarter performance
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Institutional Confidence and Market Capitalisation
Institutional investors hold a significant 21.99% stake in L&T Finance Ltd, a figure that has increased by 1.26% over the previous quarter. This rising institutional interest is a positive signal, as these investors typically possess superior analytical capabilities and resources to assess company fundamentals. The company’s market capitalisation stands at ₹75,546 crores, categorising it as a mid-cap stock with considerable liquidity and market presence.
The MarketsMOJO Mojo Score of 72.0 and a Mojo Grade upgrade to Buy further reinforce the stock’s attractiveness. The upgrade from Hold to Buy on 26 Feb 2026 reflects improved earnings visibility and operational momentum, encouraging investors to consider L&T Finance Ltd as a core portfolio holding.
Risks and Valuation Concerns
Despite the impressive returns, certain risks warrant cautious consideration. The company’s net sales have grown at a modest annual rate of 4.90%, while operating profit has increased by 4.36% annually, indicating relatively slow top-line and margin expansion. This slower growth trajectory could constrain future upside if not addressed through strategic initiatives.
Moreover, the company’s PEG ratio stands at 2.6, signalling that the stock’s price growth has outpaced earnings growth, which may imply an expensive valuation. The ROE of 10.2% is moderate for the NBFC sector, and the premium valuation relative to peers suggests that investors are pricing in continued strong performance, which may be challenging to sustain amid macroeconomic uncertainties.
Investors should also note the stock’s year-to-date performance of -5.09%, slightly underperforming the Sensex’s -3.49%, which could reflect profit-booking or sector-specific headwinds. Vigilance on quarterly earnings and asset quality metrics will be essential to gauge the sustainability of the current momentum.
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Outlook and Investment Considerations
L&T Finance Ltd’s multibagger status is underpinned by strong quarterly earnings, robust institutional backing, and a track record of outperforming market benchmarks. The company’s ability to sustain this momentum will depend on its capacity to accelerate revenue growth, improve return ratios, and manage asset quality amid evolving economic conditions.
For investors, the stock presents an attractive opportunity within the NBFC sector, especially given its upgraded Mojo Grade and strong financial metrics. However, the premium valuation and moderate growth rates suggest that a measured approach is prudent, balancing the potential for further gains against valuation risks.
In summary, L&T Finance Ltd exemplifies a well-executed growth story in the NBFC space, delivering exceptional returns over multiple time frames. Its recent upgrade to Buy by MarketsMOJO and strong quarterly results provide a compelling case for inclusion in growth-oriented portfolios, while ongoing monitoring of fundamentals will be key to realising sustainable gains.
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