22 January 2019 L&T; Finance Holdings (LTFH) 3QFY19 PAT grew 81% YoY to INR5.8b, in line with our estimate, driven by strong AUM growth (+23% YoY), retailization of the balance sheet, and improving asset quality. LTHF prioritized its rural lending business in the quarter. The reduction in the GNPL ratio has come on the back of an improvement in asset quality in the rural lending book, while the housing finance and wholesale finance books witnessed stable asset quality. Over the past two years, LTFH has delivered a turnaround in business, with a strong improvement in RoE from 10% to 18%. It is now well on its journey of retailization of the balance sheet. Notwithstanding the tight liquidity in the past quarter, management has been able to grow its focused products impressively and yet maintain sufficient liquidity. We remain confident that LTFH would continue to generate strong return ratios over the medium term.