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Shriram Trans Fin: Starts FY18 on a healthy note - Views on News from Equitymaster
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Shriram Trans Fin: Starts FY18 on a healthy note
Sep 6, 2017

Shriram Transport Finance (STFC) declared its results for the first quarter of the financial year (1QFY18). On a standalone basis, the institution saw its net interest income grow by 17.6% YoY and the profits increase by 20% YoY in 1QFY18. Here is the detailed analysis of the results.

Performance summary
  • Backed by a 33% surge in securitization income, overall interest income grew by 7.7% YoY in 1QFY18. The AUM grew by 9% YoY during the quarter with the Off Book AUM up by a steep 22.7% YoY. As on 30th June 2017, STFC's total securitized book stood at Rs 133 billion constituting 16% of AUM.
  • Net interest margins (NIMs) expanded by 0.2% YoY to 7.5% in 1QFY18 mainly on account of repricing of long term borrowings at lower interest rates as well as less income reversal booked as compared to the year-ago quarter.
  • Other income increased by 30.9% in 1QFY18 driven by a 132% jump in fee based income. The share of fee based income rose from 7.4% in 1QFY17 to 13% in 1QFY18.
  • Operating expenses remained under control registering a growth of 1.1% YoY during the quarter due to fresh hirings where the variable and other incentives are less. The cost-to-income ratio fell by 3% YoY to 21% in 1QFY18. The company's employee strength stood at 20,89 in 1QFY18 as compared to 19,125 in 1QfY17. The NBFC expects the cost-to-income ratio to normalise to around 22-24%, going ahead.
  • Gross NPA ratio increased to 8% in 1QFY18 from 6.4% in the year-ago quarter mainly due to the shift from 150 to 120 days NPA recognition norms from 4QFY17 onwards. But on a sequential basis, the ratio has improved slightly due to good cash movement.
  • Provisions grew by 26.5% YoY. The provision coverage ratio (PCR) increased marginally to 70.8% in 1QFY18 from 70.4% in 1QFY17. The NBFC plans to bring down the PCR ratio to 60-65% once it transitions to 90 DPD NPA norms in 4QFY18.
  • Backed by a modest rise in operating expense and healthy growth in income, net profit increased by 20% YoY in 1QFY18.
  • The capital adequacy for the NBFC remained healthy at 16.3% at the end 1QFY18.

    Standalone Financial Performance Snapshot
    Rs (m) 1QFY17 1QFY18 Change
    Interest Income 26,639 28,657 7.7%
    Interest Expense 13,165 12,835 -2.5%
    Net Interest Income 13,474 15,852 17.6%
    Net interest margin (%) 7.3% 7.5%  
    Other Income 167 218 30.9%
    Other Expense 3,341 3,379 1.1%
    Provisions and contingencies 4,603 5,823 26.5%
    Profit before tax 5,696 6,869 20.6%
    Tax 1,956 2,382 21.8%
    Profit after tax/ (loss) 3,741 4,487 19.9%
    Net profit margin (%) 14.0% 15.6%  
    No. of shares (m)   226.9  
    Book value per share (Rs)   510.4  
    P/BV (x)*   2.1  

    * Book value as the end half year end 30th June 2017

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