Shriram Finance Q3FY25: Strong Loan Book Growth, PAT Boosted by Exceptional Gain, NIMs Contract
Company Name: Shriram Finance Ltd | NSE Code: SHRIRAMFIN | BSE Code: 511218 | 52 Week high/low: 730 / 439 | CMP: INR 512 | Mcap: INR 96,205 Cr | P/BV – 1.88
About the stock
➡️Shriram Finance Ltd., a significant entity within the Shriram Group, operates extensively in consumer finance, stock broking, distribution, life insurance, and general insurance. Founded in 1979, the company stands as India’s largest non-bank financial company (NBFC) in retail asset finance. It is a leader in structured financing of used commercial vehicles and two-wheelers, specializing in serving small business owners and road transport operators.
Robust loan book growth backed by healthy growth in CV, PV and MSME
➡️Shriram’s loan book has grew by double digit at 19% YoY (+5% QoQ) to 2,54,470 Cr supported by growth in CV, PV and MSME segment.
➡️Commercial vehicle constitute 45% of the overall loan book, growing by 13% YoY (+3% QoQ) to 1,15,767 Cr. Passenger vehicle segment constitute 20% of overall segment, growing by 25% YoY (+6% QoQ) to 51,884 Cr. While MSME segment constitute 14% of overall segment, growing by healthy growth of 50% YoY (+7% QoQ) to 34,632 Cr. This three segment led the solid growth in overall loan book in Q3FY25.
➡️Rest other segment report good growth but command a low weight in overall loan book. Construction equipment grew at 10% YoY followed by Farm equipment at 42% YoY, 2W at 27% YoY, gold at -7% while personal loan degrow by 9% YoY.
➡️Borrowing overtake the loan growth, increased by 26% YoY (+8% QoQ) to 2,235 bn driven by deposit growth of 24% YoY (+6% QoQ).
| Book Growth (As on) | Q3FY25 | Q3FY24 | YoY (%) | Q2FY25 | QoQ (%) |
| Loan | 2,54,470 | 2,14,233 | 19% | 2,43,043 | 5% |
| Borrowings (bn) | 2,235 | 1,775 | 26% | 2,078 | 8% |
| Deposit (bn) | 534 | 431 | 24% | 502 | 6% |
Double digit growth in NII backed by loan book expansion; while NIMS down 50 bps
➡️NII report a double digit healthy growth of 14% YoY (+2% QoQ) to 5,590 Cr driven by loan book expansion only while NIMs contract for the quarter. NIMs down by 50 bps YoY (-26 bps QoQ) to 8.48% due to the expansion in CoF.
➡️PPOP jump 11% YoY (+2% QoQ) to 4,085 Cr, Operating efficiency benefit lagged as total OpEx increased 22% due to rise in employee cost and other expense.
➡️PAT boost by 96% YoY (+72% QoQ) to 3,570 Cr on one time exceptional gain of 1,657 Cr. PAT excluding exceptional item report 5% YoY and on QoQ degrow 8%.
| Years | Q3FY25 | Q3FY24 | YoY (%) | Q2FY25 | QoQ (%) |
| Interest income | 10,341 | 8,618 | 20% | 9,815 | 5% |
| Interest expenses | 4,751 | 3,707 | 28% | 4,350 | 9% |
| NII | 5,590 | 4,911 | 14% | 5,464 | 2% |
| Other income | 365 | 309 | 18% | 282 | 29% |
| Total Net income | 5,954 | 5,220 | 14% | 5,746 | 4% |
| Employee expenses | 970 | 810 | 20% | 907 | 7% |
| Other OpEx | 899 | 721 | 25% | 853 | 5% |
| Total Opex | 1,869 | 1,531 | 22% | 1,760 | 6% |
| PPOP | 4,085 | 3,689 | 11% | 3,987 | 2% |
| Provision | 1,326 | 1,250 | 6% | 1,235 | 7% |
| Exceptional items | 0 | 0 | |||
| PBT | 2,759 | 2,440 | 13% | 2,752 | 0% |
| Tax expenses | 846 | 621 | 36% | 680 | 24% |
| Tax rate | 31% | 25% | 20% | 25% | 24% |
| PAT | 1,913 | 1,818 | 5% | 2,071 | -8% |
| PAT% | 18% | 20% | -12% | 21% | -13% |
| EPS | 10.17 | 9.68 | 5% | 11.02 | -8% |
| No. of equity shares | 188 | 188 | 0% | 188 | 0% |
Asset quality improved YoY; QoQ remain stable
➡️Shriram’s asset quality has been improved during the quarter as GNPA and NNPA are in downward trajactory. GNPA/NNPA decline 28 bps/ 4 bps YoY while QoQ basis remain stable to stood at 5.38%/2.68% as of Q3FY25.
| Asset Quality | Q3FY25 | Q3FY24 | YoY (bps) | Q2FY25 | QoQ (bps) |
| GNPA | 5.38 | 5.66 | -28 | 5.32 | 6 |
| NNPA | 2.68 | 2.72 | -4 | 2.64 | 4 |
Valuation and Key metrics
➡️Currently the stock is trading at 1.88x price to book value. NIMs contract by 50 bps YoY and 26 bps QoQ to 8.48% led by the expansion in CoF. ROA dissapoint down by 23 bps YoY and QoQ both to 2.88% while ROE down 13 bps YoY and 59 bps QoQ 16%. Company capital position CAR remain stable YoY to stood at 21% but still above the RBI guidelines.
| Key metrics | Q3FY25 | Q3FY24 | YoY (bps) | Q2FY25 | QoQ (bps) |
| NIMs | 8.48 | 8.99 | -51 | 8.74 | -26 |
| ROA | 2.88 | 3.11 | -23 | 3.06 | -18 |
| ROE | 15.41 | 15.54 | -13 | 16 | -59 |
| PCR | 0 | 51.7 | -5170 | ||
| CAR | 21 | 21.01 | -1 | 20.16 | 84 |
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