L&T Finance Ltd Forensic Report - SOIC x StockScans Report

as of Jul 2026

L&T Finance Ltd’s record is clean on audit, promoter holding, and regulatory compliance: eight years of unqualified opinions and a dominant unpledged promoter. Two things deserve attention. Operating cash flow has been deeply negative for two years running even as reported profit rose and dividends were stepped up each year, and a large GST show-cause notice of ₹358.57 crore remains outstanding.

Key findings

  1. Operating cash flow is deeply negative for two years despite rising profit and dividends Major - Consolidated operating cash flow was negative ₹14,189 crore in FY26 and negative ₹16,587 crore in FY25, while consolidated PAT was ₹2,983 crore and ₹2,643 crore. The CFO/PAT ratio stood at -4.76x and -6.28x, after a brief positive turn of 0.30x in FY24. The Board proposed a final dividend of ₹2.75 per share for FY26, continuing a three-year step-up, and dividend paid reached ₹686.77 crore.
  2. A GST show-cause notice presents a potential liability of ₹358.57 crore, while several wholesale exposures are fully written off but still pursued Minor - A GST show-cause notice dated 18 October 2018 was confirmed by the Principal Commissioner of CGST, Mumbai in February 2023 with financial implications of ₹39.86 crore for FY2013-14, ₹70.01 crore for FY2014-15, ₹105.02 crore for FY2015-16, and ₹143.68 crore for FY2016-17. The company disclosed pending litigation against Coastal Projects Limited with aggregate claims of ₹1,165.77 crore, Supertech Limited at ₹410.6 crore, and several other borrowers, with the Coastal Projects, Punj Lloyd, and Surana Power accounts fully written off in September 2021.
  3. Promoter L&T holds 65.96% with zero pledge, but public institutional shareholders cast material dissent on director appointments Minor - Promoter Larsen & Toubro Limited held 65.96% of the company as of the latest filing, with 0.00% of promoter shares pledged. At the AGM on 29 May 2026, the resolution to re-appoint Mr. S.N. Subrahmanyan as a director received 19.50% of public institutional votes cast against. At the postal ballot concluded on 12 March 2024, the resolution to appoint Mr. Sudipta Roy as MD & CEO received 50.25% of public institutional votes cast against.
  4. Goodwill on the June 2025 gold-loan acquisition is untested, though no impairment charge has ever been required Minor - The Group acquired the gold loan business of Paul Merchants Finance Private Limited on 9 June 2025, including a loan book of ₹1,334.83 crore, and recognised goodwill of an unstated amount. Goodwill with indefinite life is tested for impairment annually, and the FY26 annual report contains no disclosure of any impairment charge. Across FY19, FY22, FY24 and FY26, no impairment loss on goodwill has been reported in any year.
  5. Revenue recognition is conservative on penalty interest and bounce charges, but the loan book is shifting to algorithm-driven selection Clean - Interest on delayed payments and bounce charges are recognised only on realisation, consistently from FY24 through FY26. Gross NPAs increased from ₹4,040.43 crore in FY25 to ₹4,565.56 crore in FY26, and the Net NPAs to Net Advances ratio rose from 1.71% to 1.79%. Management stated that the full effect of Project Cyclops underwriting on credit cost trajectory will be seen only in FY28.

What to watch

Bottom line: This is a disclosed and conservatively audited record with a regulatory penalty of ₹2.50 crore imposed by the RBI in October 2023 and a stable, unpledged promoter. The risk sits in one place: operating cash flow, which has run deeply negative for two years while dividends climbed. Read the FY27 cash flow statement with that in mind, and watch whether the GST show-cause notice and the written-off wholesale exposures produce recoveries or further demands.