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Shriram Trans Fin: Earnings hit by jump in provisions - Views on News from Equitymaster
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  • May 13, 2016 - Shriram Trans Fin: Earnings hit by jump in provisions

Shriram Trans Fin: Earnings hit by jump in provisions
May 13, 2016

Shriram Transport Finance (STFC) declared its results for the fourth quarter of the financial year (4QFY16). On a standalone basis, the institution grew its net interest income by 31% YoY and the profits fell by 54.6% YoY in 4QFY16. For FY16, the profits for the company fell by 4.8% YoY. Since the standalone financials include the performance of the erstwhile 100% subsidiary Shriram Equipment Finance which has been amalgamated with it effective from April 2015, the financials are not strictly comparable with 4QFY15 and FY15. Here is the detailed analysis of the results.

Performance summary
  • Income from operations grew by 26.3% YoY in 4QFY16 on the back of 23% YoY growth in Assets under Management (AUM) during the quarter. For FY16, the top-line moved up by 18.5% YoY.
  • Net interest margins (NIMs) expanded by 1% to 7.7% in 4QFY16. In FY16, NIMs moved up to 7.2% from 6.6% in the year-ago quarter.
  • Other income fell by 54% YoY in 4QFY16 and by 18.3% in FY16.
  • A steep rise in provisions pulled down operating profit by 54.6% YoY in 4QFY16. For FY16, the net profit was down by 4.8% YoY.
  • Gross NPAs surged to 6.2% in 4QFY16 from 3.8% in the year-ago period
  • The capital adequacy for the NBFC stood at 17.55% at the end FY16 compared to 20.5% at the end of FY15.
  • The financial entity has declared a final dividend of Rs 6 per share which along with interim dividend of Rs 4 per share makes a total dividend of Rs 10 share for FY16. This translates into a dividend yield of 0.9% for the year.

    Standalone Financial performance snapshot
    Rs (m) 4QFY15 4QFY16 Change FY15 FY16 Change
    Income from operations 23,107 29,173 26.3% 86,370 102,389 18.5%
    Interest Expense 11,843 14,424 21.8% 43,900 50,579 15.2%
    Net Interest Income 11,264 14,749 30.9% 42,470 51,810 22.0%
    Net interest margin (%) 6.7% 7.6% 6.6% 7.2%
    Other Income 16 8 -54.3% 78 64 -18.3%
    Other Expense 3,112 4,017 29.1% 11,232 13,473 20.0%
    Provisions and contingencies 3,386 8,567 153.0% 12,892 20,586 59.7%
    Profit before tax 4,782 2,172 -54.6% 18,424 17,814 -3.3%
    Tax 1,615 733 -54.6% 6,046 6,032 -0.2%
    Profit after tax/ (loss) 3,167 1,439 -54.6% 12,378 11,782 -4.8%
    Net profit margin (%) 13.7% 4.9% 14.3% 11.5%
    No. of shares (m) 226.9
    Book value per share (Rs) 446.6
    P/BV (x)* 2.5

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