22 October 2019 LTFH reported a decent second-quarter performance amidst the tough economic environment. PAT (excluding one-off items) grew 16% YoY to INR6.5b (7% of our estimate). LTFH, however, took a one-time hit of INR4.7b on profits from DTA revision DTA under the new tax regime. Overall focused book disbursements declined 12% YoY to INR98b, driven by lower real estate and infra disbursements. Rural disbursements were in line with past trends. As a result, the share of rural lending in the total loan book increased 300bp YoY to 27%. While management expects 2HFY20 to be relatively slower in retail lending, it expects a pickup from FY21 onwards. Spreads were stable QoQ and YoY at 6.1%.Interestingly, GNPL/NNPL ratio increased 25/35bp QoQ due to seasonality in rural NPLs and the impact of floods in some areas. The company continues maintaining INR3.5b floating provisions. Tax rate for the quarter stood at 14% versus our estimate of 22%.