Shriram Finance Q3 Results Review - Strong Growth And Steady NIMs Drive Performance: Systematix

Systematix Report

Shriram Finance Ltd.'s Q3 FY24 operating performance in-line with our estimates with net interest income / OP at Rs 49.1 billion/ 36.8 billion, aided by steady margin QoQ at ~9% and 21% YoY growth in Assets under management. Strong growth in high yielding segments of Passenger vehicle, Gold loan and Ministry of Micro, Small & Medium Enterprises aided in maintaining steady net interest margin.

Asset quality saw marginal improvement with GS3/ NS3 at 5.7%/2.7% versus 5.8%/2.8% in Q2, partially aided by higher write offs at Rs. 7.3 billion. Higher than expected provisioning at Rs 12.5 billion (versus. estimate. of Rs 10.9 billion) led to lower profit after tax at Rs 18.2 billion (versus. estimate. of Rs 19.3 billion).

Management’s outlook remains positive with AUM growth guidance of 20% for FY24 and 15% over the long term and credit cost guidance of 2%. NIMs are broadly expected to remain steady at ~9% aided by focus on high yielding products.

We have revised our earnings estimates upwards by 5%/ 10% for FY24/25, as we factor in higher AUM growth for FY24 and steady NIMs. We retain our 'Buy' rating and increase our target price to Rs.2725 (from Rs.2,335) as we rollover to March 2026, valuing the company at ~1.6 times FY26E book value.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.