L&T Finance Soars 39% – But Is the Rally Over? UBS Weighs In!

UBS Just Downgraded L&T Finance to ‘Neutral’—Here’s What It Means for Your Portfolio

Okay, let’s talk about L&T Finance. You know, that NBFC stock that’s been on fire lately? Yeah, the one that shot up like 39% in just a few months. Crazy run. But here’s the thing—UBS just downgraded it from ‘buy’ to ‘neutral’. And while they bumped up their target price to ₹210 (from ₹177), that’s only about 13% upside from current levels. Not exactly thrilling, right? So, what’s really going on here?

Why L&T Finance Was Killing It

First, let’s understand why the stock took off in the first place. It wasn’t just luck—the company actually fixed some real problems:

• Loan book growth: Their retail and rural financing segments? Doing really well now. Like, actually growing instead of just treading water.
• Fewer bad loans: Remember when everyone was worried about their NPAs? Well, they’ve gotten that under control. Mostly.
• Making more money: Their ROE and margins look way better than before. Which, you know, tends to make investors happy.

And let’s be real—having the L&T name behind them doesn’t hurt. When your parent company is one of India’s most trusted infrastructure giants, people cut you some slack.

Why UBS Hit the Brakes

But here’s where it gets interesting. UBS—those Swiss banking guys who usually know their stuff—just downgraded the stock. Why? Two big reasons:

• Price got ahead of itself: That 39% surge? Yeah, it might have been too much too fast. The stock’s not exactly cheap anymore.
• Limited upside: Their new ₹210 target means there’s not much meat left on the bone. At least not enough to get excited about.

Let me put it this way—it’s like when your favorite street food place gets discovered by food bloggers. The quality’s still good, but now you’re paying double for the same vada pav.

Is It Still Worth Buying?

Honestly? Depends on what kind of investor you are:

If you’re in it for quick gains:

Might be time to take some profits off the table. The easy money’s been made.

If you’re playing the long game:

The fundamentals are still solid. But—and this is important—you’ll need to watch their execution like a hawk. One slip and that premium valuation could disappear fast.

Oh, and if you’re looking at other options? Bajaj Finance is always interesting, and Mahindra Finance has been doing some smart things lately. Just saying.

The Bottom Line

Here’s how I see it: L&T Finance fixed its business, the market noticed, and the stock ran up. Now? It’s probably priced about right. Could it go higher? Sure. But the risk/reward isn’t as juicy as it was a few months back.

My gut says wait for either a pullback or clearer signs they can keep this growth going. Because let’s be real—in this market, patience usually pays off.

Source: Livemint – Markets