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Shriram Trans Fin: Growth on Track But Not Without Quality Concerns - Views on News from Equitymaster
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  • Aug 26, 2016 - Shriram Trans Fin: Growth on Track But Not Without Quality Concerns

Shriram Trans Fin: Growth on Track But Not Without Quality Concerns
Aug 26, 2016

Shriram Transport Finance (STFC) declared its results for the first quarter of the financial year (1QFY17). On a standalone basis, the institution grew its net interest income by 18.5% YoY and the profits increased by 16.5% YoY in 1QFY16. Here is the detailed analysis of the results.

Performance summary
  • Income from operations grew by 14% YoY in 1QFY17 on the back of 24% YoY growth in Assets under Management (AUM) during the quarter.
  • Net interest margins (NIMs) expanded by 0.6% to 7.4% in 4QFY16.
  • Other income increased by a subdued 2.8% primarily on account of a 25% fall in fee based income.
  • Operating expenses grew at a controlled 15% during the quarter. The cost-to-income ratio was maintained at 25% during the quarter.
  • Gross NPA ratio surged to 6.4% in 1QFY17 from 4% in the year-ago period mainly due to the accretion of NPAs of Rs 960 m from the amalgamation of Shriram Equipment Finance as also the shift from 180 to 150 days NPA recognition norms from 4QFY16. Sequentially, the GNPA ratio has risen by a mere 0.2% which is a more like-to-like comparison.
  • Net profits grew by 16.5% on a 20% YoY increase in provisions coupled with 24% YoY rise in tax outgo. The provision coverage ratio stood at 70.4% in 1QFY17 as compared to 78.5% in 1QFY16.
  • The capital adequacy for the NBFC stood at 17.37% at the end 1QFY17.

    Standalone Financial performance snapshot
    Rs (m) 1QFY16 1QFY17 Change
    Income from operations 23,328 26,626 14.1%
    Interest Expense 11,972 13,165 10.0%
    Net Interest Income 11,356 13,461 18.5%
    Net interest margin (%) 6.8% 7.3%
    Other Income 162 167 2.8%
    Other Expense 2,905 3,341 15.0%
    Provisions and contingencies 3,823 4,591 20.1%
    Profit before tax 4,790 5,696 18.9%
    Tax 1,579 1,956 23.8%
    Profit after tax/ (loss) 3,211 3,741 16.5%
    Net profit margin (%) 13.8% 14.1%
    No. of shares (m) 226.9
    Book value per share (Rs) 463.2
    P/BV (x)* 2.7

    * Book value as the end half year end 30th June 2016

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