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Strong Growth in Net Interest Income, led Shriram Transport Finance to post 44% YoY Growth in PAT in Q4 FY22 | Result Analysis & Conference Call Highllights

Strong Growth in Net Interest Income, led Shriram Transport Finance to post 44% YoY Growth in PAT in Q4 FY22 | Result Analysis & Conference Call Highllights

Published on 01 May 2022 .Views 5 .Comments 0
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Indian Economy Highlights:

Budget 2022 recognizes Infrastructure as a key corner stone.
Budget Given accelerated Capital Expenditure cycle providing sharp increase in Capital Expenditure outlay by 35.4% to INR 7.5 lakh crores to augment Infrastructure spending.
Elevated Inflation trends remains as a challenge for company’s growth ambitions.
Wholesale Inflation of average 13% in FY22 is more than the double rate of retail inflation.
CPI Inflation jumped to 6.95% in March 2022, as compared to 6.05% in Feb 2022.
Retail Inflation is continuously above the RBI’s comfort zone value for three months.
Gross GST Revenue in March FY22 is 1,92,045 crores which is all time high compared to 1,40,986 crores in Jan FY22. GST Revenue of March FY22 is greater than GST Revenue of March FY21.
Average GST Revenue in FY22 reflects Economic Recovery and direction of growth.
War in Europe viewed as opportunity for India on Wheat export with higher returns than MSP, High Edible oil price is also remunerative for local farmers.
High Crude Oil price is a big challenge and it has direct effect o WPI AND CPI numbers, It also had impact on Balance of Payments.

 
Business Highlights:

In spite of Chip Shortage, Sales of Commercial Vehicles grew by 18.75% YoY and grew by 28.3% Q-o-Q.
Heavy and Medium Vehicles sales grew by 16.69% YoY AND 46.92% Q-o-Q.
Demand for Used Vehicles is pretty high, On Average Resale prices grew by 20%.
Collections are improved over every quarter with 91.04% in Q1, 99.03% in Q2, 101.17% in Q3, 104.2% in Q4 FY22.
Disbursements grew by 13.2% YoY and 9.64% Q-o-Q.
Assets under Management grew by 8.36% YoY and 1.96% Q-o-Q.
On Growth Outlook, targeted growth is 15% on combined entity and on standalone basis targeted growth of commercial vehicle lending will be 12%.
Added 20 new branches mostly conversion of rural centers into branches in this quarter, total branches count stands at 1854.
Added more employees through Business Associate Method to onboard new employees by fresh training.
Four New Amendments of RBI ON Jan 2022 are obliged successfully.


Profitability Numbers:

Net Interest Income grew by 22.16% YoY and 10.04% Q-o-Q.
Net Interest Margin is at 6.96% for Q4 FY22 compared to 6.80% for Q4 FY21 and 6.65% for Q3 FY22.
Profit After Tax grew by 43.87% YoY and 59.58% Q-o-Q.
Earning Per Share is at 101.74 rupees  in FY22 compared to 100.97 rupees in FY21.

Liquidity Position:

Liquidity value is at 17,709 crores in Q4 FY22 compared to 17,399 crores in Q3 FY22, Board suggested to higher liquidity due to Geopolitical tensions and also concern on raised covid cases.
Liquidity of the company is good enough to repay liabilities in next 6 months, we are looking to bring down liquidity slowly from Q1 FY23.
Trying to build liquidity buffers for a dollar bond which is going to mature in October.

 
Merger Progress:

The company has received approval from BSE and NSE under regulation 37 of SEBI LODR.
As per the direction of Stock Exchange company has posted all necessary documents and information pertaining to the scheme on Company’s Website.
Filed a company application seeking direction from NCLT, Chennai for a convenient meeting of shareholders, secured creditors and unsecured creditors, waiting for the listing of the application.
Necessary Company petition will be filed with NCLT after resolutions are passed at shareholders and creditors meeting for the approval of this scheme.
All Matters, Activities in conduction with regulatory approval are progressing as per the schedule.
The scheme is effective upon approval of Honourable NCLT, Chennai.
We made significant progress on merger front, started integrating systems and processes, HR Integration is on the way.
JMD’s who are geographical unit heads are all set to take up their responsibilities.

 
Provisions:

Loans outstanding of 799.92 crores are written off using ECL provisions created as a management overlay for COVID-19.
ECL Provisions of 2052 crores is retained by the company as of Mar 31, 2022, towards management overlay on account of COVID-19.
We ae carrying extra provisions of 6492 crores for IRACO equipment.

 
Liabilities:

Total Liabilities are at 1,14,497 crores at Mar, 2022, Liability Composition has changed quite a bit compared to last year.
Share of Deposits increased from 14.76% in FY21 to 19.14% in FY22.
Share of Bank Loans increased from 16% in FY21 to 19.6% in FY22.
Every Category of Liabilities has a share of close to 20% except Debt Capital Market which has a share of 23%.
Fund Mobilisation for this quarter is good, total funds mobilised in Q4 FY22 is 15,000 crores including ECB which are in January to an extent of 3,500 crores.


Costs:

Credit Cost is at 2.03% for Q4 FY22.
Cost to Income is at 20% for Q4 FY22.
The Cost of Liabilities come down to 8.14% down by 83 bps from previous year, decline of 31bps Q-o-Q.
Incremental Cost of fund is down by 20bps.

 
Asset and Liability Management:

On ALM, all buckets have been positive, cumulative surplus upto 1 year will be 20,000 crores and upto 3 years will be 26,000 crores.
High Quality Liquid Assets is 148.7% against regulatory requirements of 60%.
On One Time Resourcing, company had implemented both OTR1 and OTR2 to release COVID related stress.
39,410 borrowers amounting 1152 crores out of which current off shedding is 852 crores 1.61% of amount is >90 days off shed.
On ECL, PD for stage 1 is 7.34% in Q4 FY22 from 7.33% in Q3 FY22, PD for stage 2 is 21.72% in Q4 FY22 from 21.75% in Q3 FY22.
Capital Adequacy Ratio is at 22.97% with Tier 1 capital at 21.70%.

Please find attached for detailed analysis.
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