Shriram Finance's Q4 Profit Leaps 57%, Eyes 15% AUM Growth by FY25

Shriram Finance has announced a significant increase in its consolidated net profit for the March 2024 quarter, marking a 57% rise to Rs 2,021 crore, primarily due to reduced loan provisions and an increase in core income. This performance is a notable improvement from the Rs 1,288 crore net profit recorded in the same quarter of the previous year. Over the fiscal year 2023-24, the company's profit after tax saw a healthy growth of 22.9%, reaching Rs 7,399 crore.

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The firm's consolidated net interest income for the fourth quarter also saw a robust increase of 22%, amounting to Rs 5,543 crore compared to Rs 4,534 crore in the corresponding period last year. This growth has been attributed to a modest 6.72% increase in loan loss provisions, which totalled Rs 1,265 crore, thereby supporting the overall profit growth.

Shriram Finance's total assets under management (AUM) as of March have surged by 21% to Rs 2,24,862 crore from Rs 1,85,682.86 crore at the end of the previous fiscal year. Umesh Revankar, the executive vice chairman of Shriram Finance, shared insights into future growth strategies. He mentioned that the company is aiming for a 15% growth in AUM in FY25, driven by heightened demand for passenger vehicles and small business loans. However, he anticipates the first quarter to be slow due to the elections.

The net interest margin for the quarter stood at 9.02%, with expectations to expand it further by 0.05% by fiscal end. Revankar highlighted that anticipated rate cuts in the second half of FY25 are likely to contribute to this expansion. Additionally, he expressed confidence in reducing the gross non-performing assets ratio from 5.45% as of March 31, 2024, to under 5% within the next 12 months.

On the financial stability front, Shriram Finance boasts a capital adequacy ratio comfortably over 21%. The company is contemplating a capital raise in the coming months and may pursue fundraising towards the end of the fiscal year as well.

In terms of shareholder returns, Shriram Finance has recommended a final dividend of Rs 15 per equity share with a face value of Rs 10 each (150%) for the financial year ended March 31, 2024. This recommendation is subject to shareholder approval at the upcoming AGM and follows two interim dividends declared during 2023-24: Rs 20 on October 26, 2023, and Rs 10 on January 25, 2024. Consequently, the total dividend payout for the year will amount to Rs 45 per share (450%).

Furthermore, Shriram Finance's board has approved the acquisition of a 100% equity stake in Shriram Overseas Investments Private Limited (SOIPL) from Shriram Investments Holdings Pvt Ltd. This strategic move signifies Shriram Finance's commitment to expanding its investment portfolio.

The company's stock performance reflected positive investor sentiment as it closed up by 0.34% at Rs 2,502 apiece on the BSE, contrasting with a 0.82% correction observed in the benchmark index.