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Prabhudas Lilladher Report
Shriram Transport Finance Company Ltd. reported decent earnings during Q3 FY22. Higher provisions led by the need to restrict net non-performing assets to 4% (in-line with Reserve Bank of India norms) offsetting the improved funding costs benefits and lower opex brought about marginal beat to earnings.
Decent loan traction led by used commercial vehicles with used now forming 92% of overall loans translated into better net interest income.
Gross non-performing asset/stage-III at 8.40% spiked 58 basis points QoQ on account of new RBI norms of daily stamping of NPAs but was restricted to levels lower than our estimates due to aggressive write-offs (Rs 4.5 billion; 0.4% of total loans).
Said that, Shriram Transport Finance's management expects almost 80 bps decline in forthcoming quarter on the back of improved collections and customer awareness initiatives.
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