Shriram Finance Ltd. Q2FY25 Result

ShriramFinanceLtd.Q2FY25ResultbyManish Chowdhury, Head of Research, StoxBox

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ShriramFinance (SFL) has demonstrated robust earnings, highlighted by an 18% annually increase in PAT and growth in AUM. In the recent quarter, we observed a slight improvement in both the GNPA and NNPA ratios, although there has been a marginal increase in provisions. However, the company experienced compression in its NIM during this period. SFL has announced a dividend and a split of shares, reflecting confidence in its financial position. Looking ahead, we anticipate an improvement in profitability and NIM. Furthermore, the stability in new delinquency creation and write-offs, coupled with consistent reductions in Stage-3 and Stage-2 asset levels, indicates a stable credit cost environment. Given these factors, our outlook on SFL remains positive, particularly with the prospect of robust AUM growth.

ShriramFinanceLtd.Q2FY25 Result First Cut – Strong performance across key operating metrics

• Net Interest Income stood at Rs. 5,607 crores in Q2FY25, showing a growth of 4.69% QoQ / up 16.37% YoY.
• Pre-provision operating profit (PPOP) stood at Rs. 3,897 crores in Q2FY25, showing a growth of 3.10% QoQ / up 14.70% YoY.
• Provisions increased to Rs. 1,235 crores in Q2FY25 from Rs. 1,188 crores in Q1FY25 and Rs. 1,129 crores in Q2FY24 respectively.
• The Net profit of Rs. 2,071 crores in Q2FY25 was up by 4.58% QoQ / up 18.30% YoY.
• NIM stood at 8.74% in Q2FY25 and was down 4bps QoQ/ down 19bps.
• Cost to Income ratio stood at 27.95% in Q2FY25 compared to 27.45% in Q1FY25 and 25.68% in Q2FY24.
• Gross NPA stood at 5.32% in Q2FY25 which declined by 7bps QoQ and was down 47bps YoY.
• Net NPA stood at 2.64% in Q2FY25, down 7bps QoQ and down 16bps YoY.
• Capital Adequacy Ratio stood at 20.16% in Q2FY25 compared to 20.29% Q1FY25 and 22.15% in Q2FY24.
• Assets under management (AUM) as of September 30, 2024, increased by 4.12% QoQ and 19.94% YoY and stood a Rs. 2,43,043 crores as compared to Rs. 2,33,444 crores as of June 30, 2024, and Rs. 2,02,641 crores as of September 30, 2023.
• RoA declined to 3.06% in Q2FY25 compared to 3.12% in Q1FY25 and 3.12% in Q2FY24
• The company’s board declared an interim dividend of Rs. 22 per share and has set the record date on November 7, 2024.
• ShriramFinanceLtd. announced a stock split at the conclusion of its board meet on Friday, October 25.

The company will split one share with a face value of Rs. 10 into five shares of face value of Rs. 2.