L&T Finance is exploring “inorganic structures” to exit the real estate projects lending business or at least reduce its exposure in the segment by partnering with other financiers, a top company official said on Monday.

The company is also looking to partner with dedicated funds to create a platform which will commit funds to the infrastructure projects. This will help the company in eventually bringing down its loan book in the segment.

The L&T Group company, which had an exposure of over Rs 11,000 crore to the realty sector as of March, feels the risk-return paradigm in the sector is “not favourable” despite some improvements that it has witnessed like an improvement in flat sales, its Managing Director and Chief Executive Dinanath Dubhashi told reporters.

He said the company is looking at “inorganic structures” to get down its portfolio, but made it clear that there is no intent of taking a haircut in the process. If a deal does not materialise, it will gradually run-down the portfolio, he added.

In a presentation shared with the bourses, the company said it will not be doing any new underwriting of loans in the segment and will explore exit through various inorganic structures.

Giving a peek into what is in the works, Dubhashi said the plan may involve partnering with a financier who will give additional funding for a struck project, which would eventually help L&T Finance as the developer will be able to deliver the project, realise the sale potential and pay-off the creditor.

In the infrastructure segment, where it has an exposure of over Rs 30,000 crore, the plan is to not allocate any additional capital and instead partner with an entity that will take a majority stake in the platform, Dubhashi said, making it clear that the valuation will have to be of the company’s choice to move on it.

It can be noted that in the last few years, many financiers, especially non-bank lenders, have suffered setbacks on the long gestation real estate and infrastructure bets.

Recently, A M Naik, the Chairperson of parent L&T, was quoted as saying that L&T Finance is the only listed company in the group which “has not performed”.

Parent L&T’s MD and CEO S N Subrahmanyan was installed as the non-executive chairman of L&T Finance.

L&T Finance responded with a plan to further increase the share of the high-margin and better asset quality retail composition in the portfolio to 80 per cent by FY26, from the 51 per cent in March 2022.

Dubhashi on Monday said it will require 25 per cent growth in the book on a compounded basis annually as against the 20 per cent achieved by the company in the last few years.

The company is carrying additional provisions of over Rs 1,700 crore and will wait for up to two quarters more to take a call on whether to write those back, he said, adding that there are already reports of a fourth Covid wave forming up.