Shriram Transport Finance Q2 net profit rises 38% to Rs 1,067 crore

Shriram Transport Finance Company (STFC), the flagship company of the Shriram Group, has posted a 38 per cent rise in net profit during the second quarter of the financial year 2022-23 to Rs 1,067 crore as compared to Rs 771 crore during the same quarter in the previous financial year.

The company’s total income for the quarter under review saw a 14 per cent increase to Rs 5,351 crore, compared to Rs 4,703 crore during the July to September quarter of 2021-22. “The demand for both new and used vehicles went up and disbursements were strong. The collections were equally good at 100 per cent. We also saw improvement in the Stage III accounts. Overall, gross stage III is now around 6.93 per cent, compared to 7.82 per cent during the same time last year,” said Umesh Revankar, vice chairman and managing director, STFC. Total assets under management as on September 30, 2022 stood at Rs 135,249 crore as compared to Rs 121,647 crores during the same time in 2021.

The company’s net interest income also saw 23 per cent increase Rs 2,694 crore during the Q2 of FY23, as against Rs 2,193 crore during the same quarter last financial year. The Interest income for the period increased to Rs 5,112 crore from Rs 4,578 crore a year ago. Net non-performing assets of the company as a percentage was seen at 3.48 per cent compared to 4.18 per cent during the Q2 of FY22.  

The operating profit for the second quarter of the current financial year was up by 24 per cent to Rs 2,131 crore compared to Rs 1,717 crore during the same period in 2021-22. “In net interest margin also, there is improvement at 6.98 per cent, which is little improvement over previous quarter, in spite of increase in cost of borrowing mainly because we were able to increase our lending rates,” Revankar said. “We always believe that we should maintain NIM at around 7 per cent, plus or minus may be 15 to 20 basis points,” he added.

The collections for Q2FY’23, Q1FY’23 and Q2FY’22 were 100.13 per cent, 101.45 per cent, and 99.03 per cent of the demand respectively. The liquidity coverage ratio during the period under review was 188.11 per cent. During the quarter, STFC’s gross stage three assets declined by 1.8 per cent to Rs 9,267 crore, while while its net stage three assets also came down by 8 per cent to Rs 4,488 crore.

The group had announced the merger of STFC with Shriram City Union Finance in December last year. The Company has obtained approvals or no objection to the scheme from various bodies including the Reserve Bank of India, Insurance Regulatory and Development Authority of India and Securities and Exchange Board of India.  The group is waiting for a final order from the National Company Law Tribunal, that heard the matter on October 19.