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Key Highlights • Date of Call: July 26, 2024 • Submission to BSE and NSE: July 30, 2024 • Economic Context: • Indian GDP growth of 7.8% in the previous quarter • Expected growth of 7.2% for FY25
Executive Insights • Umesh Revankar (Executive Vice Chairman): • Strong Q1 performance linked to a robust economy • Positive trends in inflation and agricultural output due to favorable monsoon • Government focus on infrastructure and agriculture expected to benefit rural and MSME lending • Positive sales growth in the auto industry, particularly in commercial vehicles and two-wheelers
Financial Performance (Reported by Y.S. Chakravarti) • Disbursement Growth: 23.82% year-on-year, totaling INR 37,709.79 crores • Assets Under Management (AUM): Increased by 20.82% to INR 2,33,443.63 crores • Net Interest Income: Rose by 20.63% to INR 5,354.47 crores • Profit After Tax (PAT): Grew 18.21% to INR 1,980.59 crores • Asset Quality: Improved with gross Stage 3 at 5.39% • Disinvestment: Stake in Shriram Housing Finance
Funding and Cost Management • Total Debt: INR 1,91,745 crores • Cost of Debt: Marginal decrease to 8.96% • Focus Areas: Growth in vehicle loans, MSME loans, and gold loans
Operational Insights • Gold Loans: • Loans above INR 20,000 processed through banks; below this threshold disbursed in cash • Average ticket size around INR 70,000-75,000 • AUM Growth Guidance: Target of 15% for FY25 despite potential election-related slowdowns
Risk Management and Strategy • MSME Lending: 70% directed towards small businesses in service and trading sectors • Leadership Structure: Robust with succession planning in place
Challenges and Clarifications • Margin Decline: Attributed to product mix and lower yields • Provisioning Changes: Variations due to product mix; current quarter provision at INR 588 crores
Future Outlook • Growth Expectations: Anticipation to exceed guidance due to strong Q1 performance • Expansion Plans: Significant growth in MSME branches and gold loan services over the next two years • Credit Ratings: Awaiting feedback for potential upgrades; strong corporate parent may positively influence ratings
Market Observations • Used Vehicle Prices: Year-on-year growth of 10-12% • Asset Quality Improvements: Effective recovery efforts and stable cash flows despite external challenges
Conclusion • Optimism for Growth: Continued growth expected, bolstered by favorable monsoon conditions.
Shriram Finance Limited Q4 FY '24 Earnings Call Summary
Key Highlights • Date of Call: April 26, 2024 • Submitted Transcript: April 30, 2024 • Key Executives: Umesh G. Revankar (Executive Vice Chairman), Y.S. Chakravarti (Managing Director)
Economic Overview • GDP Growth: 8.4% in Q4, revised full-year forecast of 7.6% • Inflation: Retail inflation decreased to 4.85% in March • Repo Rate: Maintained at 6.5% • Rural Economy: Signs of recovery with favorable monsoon predictions and increased agricultural credit
Company Performance • Disbursement Growth: 26.64% year-on-year, totaling Rs. 39,326.86 crores • Assets Under Management (AUM): Grew by 21.1% to Rs. 2,24,861.98 crores • Net Interest Income: Increased by 20.02% to Rs. 5,336.06 crores • Profit After Tax: Surged by 48.73% to Rs. 1,945.87 crores • Earnings Per Share: Rose to Rs. 51.79 • Asset Quality: Gross Stage-3 assets at 5.45%, net Stage-3 at 2.70% • Shriram Housing Finance: Disbursements up 76.88%, AUM up 71.02% • Total Debt: Rs. 1,85,845 crores, liquidity coverage ratio of 195.55%
Future Guidance • Credit Cost Guidance: Long-term target around 2% • Commercial Vehicle Growth: Anticipated at 11-12% • AUM Growth Target: 15%, with other products needing 20% growth
Operational Insights • Product Integration: Ongoing in stages across 3,000 branches • Internal Audit Mechanisms: Robust systems in place to prevent fraud • Return on Equity (ROE): Targeting 16-18%, aiming for over 17% in FY '24
Housing Subsidiary and Credit Quality • Growth Capital: All options considered for the housing subsidiary • Stage-3 GNPAs Target: Reduction from 5.45% to 5% by year-end • Credit Costs: Expected to remain stable around 2%
Additional Notes • Interest Costs: Recent fixed deposit rate increases will not significantly impact overall costs • Write-offs: Rs. 805 crores with incremental provisioning of Rs. 456 crores • Commercial Vehicle Segment: 25% increase in used vehicle prices, projecting 12-15% growth • Cautious Approach: Slowdown in personal loans and cautious employee additions
Conclusion • Outlook: Optimism for steady growth supported by positive market conditions and government initiatives.
Earnings Call Overview • Date: January 25, 2024 • Transcript submitted to BSE and NSE on February 1, 2024 • Key Executives: Umesh Revankar (Executive Vice Chairman), Y.S. Chakravarti (Managing Director) • Positive quarter attributed to merger benefits and diverse product offerings
Economic Context • Indian economy growth: 7.6% in Q2, driven by manufacturing • Retail inflation: 5.69%; Wholesale inflation: nine-month high • RBI maintains repo rate at 6.5% and raises GDP growth projections for FY'24 to 7%
Industry Insights • Auto industry: Increased sales in commercial vehicles, two-wheelers, and three-wheelers due to strong rural demand • Construction equipment sales surge, indicating infrastructure investment • Management optimistic about future demand in agriculture and mechanized farming
Financial Performance Highlights • Q3 FY'24 disbursements: Rs. 37,787.84 crores (29.21% YoY growth) • Assets Under Management (AUM): Rs. 2,14,233.47 crores (20.70% YoY growth) • Net interest income: Rs. 5,093.93 crores (15.04% YoY growth) • Profit After Tax (PAT): Rs. 1,818.34 crores (2.33% YoY growth) • Asset quality improvement: Gross Stage-III assets at 5.66% • Shriram Housing Finance: Disbursements up 69.64%, PAT increase of 69.08%
Management Insights • Confidence in maintaining margins and growth targets • AUM growth target for FY'25: 15% • Credit cost guidance: 2% for the full year, current quarter at 2.15% • Concerns raised about increased credit costs, particularly in personal loans
Key Discussions During Concall • Write-off trends: Rs. 1,250 crores in credit costs this quarter • Growth outlook: Target of 20% AUM growth for the year • Borrowing costs increased to 8.95% due to liability mix changes • Personal loan growth expected to align with overall loan book, capped below 6% • Fintech partnerships for sourcing and merchant loans discussed
Future Outlook • Liquidity as a key performance driver • Branch expansion primarily in rural areas, with 136 new branches added • Exploration of capital infusion options for Shriram Housing Finance • Anticipation of strong performance in the upcoming quarter due to government infrastructure spending
Conclusion • Management expressed optimism for continued growth and strong performance in the next quarter.
Earnings Call Overview • Date: October 26, 2023 • Transcript submitted to BSE and NSE on October 30, 2023 • Key Executives: Umesh Revankar (Executive Vice Chairman), Y S Chakravarti, S. Sunder, Parag Sharma
Economic Context • Indian economy growth: 7.8% in Q1 FY24, projected 6.5% for the year • Strong consumer demand and government infrastructure spending • Improvements in retail and wholesale inflation, strong GST collections
Financial Performance Highlights • Disbursement Growth: 30.91% year-on-year, reaching Rs. 34,605.61 crores • Assets Under Management (AUM): Increased by 19.65% to Rs. 2,02,640.96 crores • Net Interest Income: Grew by 17.38% to Rs. 4,818.18 crores • Profit After Tax: Rose by 12.59% to Rs. 1,750.84 crores • Earnings Per Share: Increased to Rs. 46.67 • Asset Quality: Gross stage 3 at 5.79%, net stage 3 at 2.8% • Dividend Declared: Rs. 20 per share
Subsidiary Performance • Shriram Housing Finance: Disbursements up 60.93%, AUM up 65.23%
Key Financial Metrics • Total Debt: Rs. 1,65,547 crores • Liquidity Position: Rs. 15,600 crores • Cost to Income Ratio: Improved to 25.68% • Liquidity Coverage Ratio (LCR): Improved to 219% • Cost of Funds: Reported at 8.87%
Strategic Initiatives • Launch of Shriram One Super App for customer engagement • Addition of 5,000 new employees, primarily in sales • Conservative AUM growth guidance of 15%, with expectations of 18%-20% in H2 FY24
Credit and Risk Management • Write-off of Rs. 839 crores, provision of Rs. 289 crores • Expected Credit Loss (ECL) provisioning changes discussed • Credit costs expected to remain between 1.5% and 2%
Future Outlook • Target return on equity (ROE): 16-18% over the next few years • Plans to add 1,500 to 2,000 employees to support expansion • Management expressed cautious optimism for growth aligned with economic demand
Additional Insights • Concerns about asset quality and yield stability addressed • Focus on cross-selling personal loans to existing customers • Management maintains a conservative growth guidance amidst economic conditions
Conference Call Details • Date: July 27, 2023 • Transcript submitted to BSE and NSE on July 31, 2023 • Key Executives: • Umesh Revankar (Executive Vice Chairman) • Y.S. Chakravarti (MD & CEO) • Format: Moderated call with Q&A session
Economic Overview • Indian economy grew by 7.2% in FY'23, exceeding government projections. • Anticipated GDP growth of over 6% for FY24. • Decline in inflation rates and stable wholesale prices. • Recovery in the rural economy reflected in FMCG consumption and agricultural income.
Company Performance Highlights • Year-on-year disbursement growth of 21.26%, totaling INR 30,454.80 crores. • Asset Under Management (AUM) grew by 18.56% to INR 1,93,214.67 crores. • Net interest income increased by 11.31% to INR 4,435.27 crores. • Profit After Tax (PAT) rose by 25.13% to INR 1,675.44 crores. • Improved asset quality with Gross Stage 3 at 6.03%.
Strategic Initiatives • Partnership with Paytm to enhance financial services access. • Upgrade in international ratings post-merger of Shriram Transport Finance and Shriram City Union Finance. • Focus on higher-yielding loans aiming for an 8.5% net interest margin.
Operational Insights • Increased vehicle utilization and reduced credit costs from 2.5% to below 2%. • 15% AUM growth guidance, with reassessment after Q2. • Plans to source 5% of AUM from FinTech partnerships.
Future Projections • Targeting a 16% return on equity (ROE) by the end of FY'24. • Expected ROA of 2.75% to 2.8% and ROE of approximately 15.5% by FY'24 end. • Anticipated growth of over 15% in the two-wheeler portfolio.
Closing Remarks • Optimism for growth throughout the year despite typical challenges. • Commitment to improving margins and delivering better results in upcoming quarters.
Earnings Call Overview • Date: May 2, 2023 • Key Executives: Umesh Revankar (Executive Vice Chairman), Y. S. Chakravarti (Managing Director and CEO) • Focus: Updates on merger, economic outlook, and operational performance
Economic and Sector Highlights • Indian economy projected growth: 6.5% • Government initiatives: Infrastructure, MSME support, agriculture • Growth in sectors: Commercial vehicles, tractors
Merger and Financial Performance • Successful merger of Shriram Transport Finance and Shriram City Union Finance • Q4 FY '23 disbursements: ₹31,054.10 crores (6.19% growth) • Full-year disbursements: ₹1,11,848.44 crores (up from ₹87,948.67 crores in FY '22) • Assets Under Management (AUM): Increased by 4.61% to ₹1,85,682.90 crores • Net interest income: Slight increase to ₹4,445.89 crores • Profit After Tax (PAT): Decreased in Q4 to ₹1,308.31 crores but increased for the full year to ₹5,979.34 crores
Asset Quality and Subsidiary Performance • Improvement in asset quality: Gross stage 3 loans at 6.21% • Shriram Housing Finance: Strong growth in disbursements and AUM, PAT up 68.19% YoY • Expansion: Added 19 branches to distribution network
Financial Metrics and Credit Costs • Total liabilities: ₹1,57,906 crores • Credit cost: 2.01%, influenced by stress testing • Cost of funds: Currently around 8.8%, potential increase anticipated
Intangible Assets and Tax Rates • Creation of intangible asset from merger: ₹1,513 crores, with annual amortization of ₹300 crores • Elevated tax rate: Expected to remain around 30% for the next couple of years
Loan Segments and Future Outlook • Personal loans: Average ticket size of ₹55,000, sourced from existing customers • Plans to scale up gold loans with necessary infrastructure • Liquidity policy: Maintaining a buffer of three months of liability repayments (₹17,600 crores) • Growth target: 15% increase in AUM over the next three years, with a focus on profitability
Overview • Date of earnings call: February 1, 2023 • First earnings report post-merger (completed April 1, 2022) • Key executives: Umesh Revankar (Executive Vice Chairman), Y.S. Chakravarti (Managing Director)
Economic Context • Positive indicators: 6.3% GDP growth, declining inflation • Optimism in rural economy and infrastructure spending • Strong sales growth in auto industry, especially commercial vehicles and e-commerce
Financial Performance • Disbursement Growth: Rs. 29,245.26 crores (up from Rs. 22,931.70 crores YoY) • Assets Under Management: Increased by 13.17% to Rs. 1,77,498.17 crores • Net Interest Income: Rs. 4,427.88 crores, net interest margin at 8.52% • Profit After Tax: Rs. 1,776.97 crores (up from Rs. 680.62 crores YoY) • Asset Quality: Gross Stage 3 declined to 6.29%
Subsidiary Performance • Shriram Housing Finance: • Disbursement growth: 30.33% to Rs. 1,001 crores • Net interest income increased by 86.26%
Borrowing and Costs • Total liabilities: Rs. 1,53,228 crores • Stable or decreasing borrowing costs anticipated • MCLR rates around 8% to 8.25%, minimal changes expected
Operating Expenses • No one-off expenses in the current quarter • Merger-related expenses of Rs. 19 crores to be deferred over five years • Credit costs expected to stabilize around 2%
Future Outlook • Projected sustainable RoA: 3%, RoE: 16-18% • Confidence in maintaining 15% CAGR growth • Focus on SME sector growth and cross-selling opportunities
Additional Insights • Cost-to-income ratio: currently 22.45%, expected to stabilize between 24%-25% • Housing finance subsidiary to remain wholly owned, no separate listing planned • Liquidity buffer of Rs. 17,000 crores until March
Conclusion • Optimism for continued growth and strong performance in upcoming quarters • Emphasis on leveraging merger synergies for operational efficiency and product expansion