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Motilal Oswal Report
Shriram City Union Finance Ltd. posted a Q1 FY23 profit after tax of Rs 3.2 billion, up 55% YoY and 6% QoQ (14% beat). The beat was driven by healthy net interest income growth of 22% YoY and benign credit costs of 2.7% (steady-state credit costs in the range of 2.5%-3.0%).
The quarter was characterised by a healthy ~74% YoY and 5% QoQ growth in disbursements to ~Rs 79 billion. Assets under management grew 17% YoY/4% QoQ to ~Rs 346 billion.
Product mix further improved in favor of personal loans and has aided yields while the ability to lower borrowing costs (despite repo rates inching up) has allowed Shriram City Union Finance to deliver an ~85 bps sequential expansion in margins.
Asset quality improved with gross stage-III declining ~20 bps QoQ without having to resort to elevated write-offs.
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