Moderate valuation, growth triggers augur well for Shriram Finance

Shriram Finance's (SHFL's) profit after tax (PAT) rose 10 per cent year-on-year (Y-o-Y) to ₹2,140 crore in the fourth quarter of the financial year 2024-25 (Q4FY25).

- DEVANGSHU DATTA

The FY25 PAT (excluding exceptional gain) grew 15 per cent Y-o-Y to ₹8,270 crore. The Net Interest Income (NII) in Q4FY25 grew 9 per cent Y-o-Y to ₹5,570 crore. However, high credit costs at ₹1,560 crore translated into annualised credit costs of 2.4 per cent.

The asset quality deteriorated and net slippages continued to remain elevated at ₹1,400 crore versus ₹1,200 crore in Q3FY25.

The stock reacted badly, falling 5.2 per cent to close at ₹621.85 on Monday on the BSE. Many analysts believe this is transient.

The yields on loans can be calculated to be up about 5bp quarter-on-quarter (Q-o-Q), while overall, spreads compressed by 25bp Q-o-Q.

Reported NIM (net interest margin) dipped 25bp Q-o-Q to 8.25 per cent, due to high liquidity on the balance sheet.