Shriram Transport End Q4 net profit jumps 44% to Rs 1,086 cr
Non-banking finance company Shriram Transport Finance on Thursday reported a 43.87% increase in its autonomous after-tax profit to Rs 1,086.13 crore in the quarter ended March 2022, driven by improved net margin interest rate and asset quality.
The company had reported a self-sustaining profit after tax of Rs 754.93 crore in the same period of FY21.
“The earnings growth was driven by better NIM (net interest margin) thanks to lower cost of funds, as well as improved asset quality,” said Umesh Revankar, vice president and managing director of Shriram Transport Finance.
The company said in a statement that the significant increase in economic activities after the easing of Covid-related restrictions had led to an improvement in its business operations.
The NIM jumped to 6.96% in the quarter under review, compared to 6.80% in the fourth quarter of FY21.
Cost of borrowing reduced to 8.54% in the reporting quarter from 9.14% in the same period last year.
Revankar expects the cost of borrowing to improve further in the first two quarters of FY23.
The company’s gross Stage 3 (non-performing assets) was 7.07% compared to 7.06% in Q4 FY21 and 8.40% in Q3 FY22. Net Step 3 was 3.67 percent versus 4.22 percent.
Its collections for the fourth quarter stood at 104.28%.
Total assets under management increased by 8.36% to Rs 127,040.86 crore as of March 31, 2022, from Rs 117,242.83 crore a year ago.
During the quarter, the company wrote off Rs 799.92 crore using the Expected Credit Loss (ECL) provision created as a management overlay due to COVID-19.
ECL provision of Rs 2,052.58 crore is retained by the company as of March 31, 2022 for management overlay due to COVID-19.
In December last year, the company’s board of directors had approved a composite plan of arrangement and merger, allowing the merger of Shriram Capital Ltd (after the spin-off of a few businesses from Shriram Capital Ltd) and Shriram City Union Finance Ltd with the company.
The company has received BSE and NSE approval in principle for the proposed merger, according to a statement.
On Thursday, the Shriram Transport Finance scrip closed at Rs 1,143.6, up 0.23%, on BSE.