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Investing.com - JPMorgan has upgraded L&T Financial Holdings (LTFH:IN) from Underweight to Neutral and significantly raised its price target to INR260.00 from INR140.00.
The upgrade comes as the financial services company has successfully managed asset quality stress related to its microfinance institution (MFI) portfolio, which has decreased from 29% of its book one year ago to 26% currently.
JPMorgan notes that L&T Financial should benefit from normalizing stress levels and an improving growth outlook for two-wheelers and passenger vehicles, which represent 21% of its assets under management, following GST cuts.
The firm also highlighted L&T Financial’s efficient use of technology for credit underwriting through the implementation of the Cyclops credit engine, which has led to significant improvement in early delinquency trends.
Despite the stock already rising 82% year-to-date, JPMorgan suggests that improving growth and credit outcome visibility could lead to a more positive outlook in the future.
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