Shriram Q2FY25 Loan Book Growth 20% YoY led by CV, PV and MSME segment
Company Name: Shriram Finance Ltd | NSE Code: SHRIRAMFIN | BSE Code: 511218 | 52 Week high/low: 3,652 / 1,851 | CMP: INR 3,093 | Mcap: INR 1,16,286 Cr | P/BV – 2.37
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 20% YoY (+4% QoQ) to 2,43,043 Cr supported by growth in CV, PV and MSME segment.
➡️Commercial vehicle constitute 46% of the overall loan book, growing by 14% YoY (+2% QoQ) to 1,12,194 Cr. Passenger vehicle segment constitute 20% of overall segment, growing by 23% YoY (+7% QoQ) to 49,000 Cr. While MSME segment constitute 13% of overall segment, growing by healthy growth of 52% YoY (+12% QoQ) to 31,300 Cr. This three segment led the solid growth in overall loan book in Q2FY25.
➡️Rest other segment report good growth but command a low weight in overall loan book. Construction equipment grew at 17% YoY followed by Farm equipment at 28% YoY, 2W at 26% YoY, gold at 12% while personal loan degrow by 6% YoY.
➡️Borrowing overtake the loan growth, increased by 26% YoY (+8% QoQ) to 2,078 bn driven by deposit growth of 23% YoY (+6% QoQ).
Book Growth (As on) | Q2FY25 | Q2FY24 | YoY (%) | Q1FY25 | QoQ (%) |
Loan | 2,43,043 | 2,02,641 | 20% | 2,33,444 | 4% |
Borrowings (bn) | 2,078.20 | 1,653.40 | 26% | 1,917.50 | 8% |
Deposit (bn) | 502 | 408 | 23% | 474.9 | 6% |
Double digit growth in NII backed by loan book expansion; while NIMS down
➡️NII report a double digit healthy growth of 19% YoY (+4% QoQ) to 5,464 Cr driven by loan book expansion only while NIMs contract for the quarter. NIMs down by 19 bps YoY (-5 bps QoQ) to 8.74% due to the expansion in CoF.
➡️PPOP jump 15% YoY (+3% QoQ) to 3,986 Cr, Operating efficiency benefit lagged as total OpEx increased 20% due to rise in employee cost and other expense.
➡️PAT boost by 18% YoY (+5% QoQ) same in line with topline growth to 2,071 Cr. This growth is only attributed to book expansion.
Years | Q2FY25 | Q2FY24 | YoY (%) | Q1FY25 | QoQ (%) | Commentry |
Interest income | 9,814.50 | 8,216.56 | 19% | 9,362.79 | 5% | Driven by healthy loan book growth |
Interest expenses | 4,350.42 | 3,621.86 | 20% | 4,128.91 | 5% | |
NII | 5,464.08 | 4,594.70 | 19% | 5,233.88 | 4% | Loan book support growth; NIMs down |
Other income | 282.18 | 347.89 | -19% | 234.28 | 20% | |
Total Net income | 5,746.26 | 4,942.59 | 16% | 5,468.16 | 5% | |
Employee expenses | 906.67 | 790.38 | 15% | 868.35 | 4% | |
Other OpEx | 853.07 | 671.38 | 27% | 745.67 | 14% | |
Total Opex | 1759.74 | 1461.76 | 20% | 1614.02 | 9% | |
PPOP | 3,986.52 | 3,480.83 | 15% | 3,854.14 | 3% | In line with topline growth; OpEx efficiency lagged |
Provision | 1,234.99 | 1,128.55 | 9% | 1,187.55 | 4% | |
PBT | 2,751.53 | 2,352.28 | 17% | 2,666.59 | 3% | |
Tax expenses | 680.27 | 601.44 | 13% | 686 | -1% | |
Tax rate | 25% | 26% | -3% | 26% | -4% | |
PAT | 2,071.26 | 1,750.84 | 18% | 1,980.59 | 5% | PAT boost with topline; no OpEx benefit |
PAT% | 21% | 20% | 0% | 21% | -1% | |
EPS | 55.10 | 46.65 | 18% | 52.69 | 5% | |
No. of equity shares | 37.59 | 37.53 | 0% | 37.59 | 0% |
Asset quality improved – GNPA/NNPA down (47 bps/16 bps YoY)
➡️Shriram’s asset quality has been improved during the quarter as GNPA and NNPA are in downward trajectory. GNPA/NNPA decline 47 bps/ 16 bps YoY while 7 bps/ 7 bps QoQ to stood at 5.32%/2.64% as of Q2FY25. Provision coverage ratio decline by 140 bps YoY while on QoQ up 55 bps to 51.7% vs 53.1% in Q2FY24.
Asset Quality | Q2FY25 | Q2FY24 | YoY bps) | Q1FY25 | QoQ (bps) |
GNPA | 5.32 | 5.79 | -47 | 5.39 | -7 |
NNPA | 2.64 | 2.8 | -16 | 2.71 | -7 |
Valuation and Key metrics
➡️Currently the stock is trading at 2.37x price to book value. NIMs contract by 1 bps YoY and 5 bps QoQ to 8.74% led by the expansion in CoF. ROA disappoint down by 6 bps YoY and QoQ both to 3.06% while ROE rise 69 bps YoY and remain flattish QoQ to 16%. Company capital position CAR down 200 bps YoY to stood at 20.16% but still above the RBI guidelines.
Key metrics | Q2FY25 | Q2FY24 | YoY (bps) | Q1FY25 | QoQ (bps) |
NIMs | 8.74 | 8.93 | -19 | 8.79 | -5 |
ROA | 3.06 | 3.12 | -6 | 3.12 | -6 |
ROE | 16 | 15.31 | 69 | 16.03 | -3 |
PCR | 51.7 | 53.1 | -140 | 51.15 | 55 |
CAR | 20.16 | 22.15 | -199 | 20.29 | -13 |
The image added is for representation purposes only