Earning Outlook
Shriram Fin's Oct-Dec PAT seen up 32% on strong AUM growth
This story was originally published at 20:22 IST on 22 January 2025
Register to read our real-time news.Informist, Wednesday, Jan. 22, 2025
By Pratiksha
NEW DELHI – Shriram Finance Ltd.'s net profit for Oct-Dec is expected to jump 31.9% on year to INR 23.99 billion on the back of strong growth in assets under management, according to the average of estimates from nine brokerages.
The Chennai-based non-banking finance company, which will release its December quarter financial results on Friday, posted a net profit of INR 20.71 billion for Jul-Sept. The estimates for Shriram Finance's net profit ranged from INR 20.95 billion to INR 35.19 billion.
As per Axis Securities Ltd.'s pre-earnings report, healthy disbursement growth will drive the non-banking finance company's steady assets under management growth of 18% on year and 4% on quarter. Motitlal Oswal Financial Services Ltd. also expects its assets under management to grow at the same pace, while IDBI Capital Ltd. sees the same rising 19.8% on year. The lender's assets under management rose 19.9% on year to INR 2.43 trillion as of Sept. 30.
Net interest income is expected to rise 11.9% on year to INR 57.02 billion for the reporting quarter, according to the average of the nine brokerages' estimates. In Jul-Sept, it was INR 56.07 billion.
The company's net interest margin is expected to remain steady with a slight negative bias, Axis Securities said. The company's net interest margin moderated to 8.74% in Jul-Sept. "Margins are expected to remain stable in the next year, with any benefits from RBI (Reserve Bank of India) rate cuts likely delayed," Elara Securities Ltd. said in a pre-earnings report.
While Axis Securities expects the lender's asset quality to remain broadly steady in the December quarter, IDBI Capital anticipates no further improvement in the asset quality of the company this time. The company's asset quality saw a slight improvement in the September quarter, with the gross non-performing asset ratio falling to 5.32% as of Sept. 30 from 5.39% as of Jun. 30. The net non-performing asset ratio dropped to 2.64% as of Sept. 30 from 2.71% as of Jun. 30.
Analysts will keep a keen eye on Shriram Finance's commentary on loan growth in commercial vehicles and guidance on the company's asset quality, credit cost and assets under management growth. On Wednesday, shares of Shriram Finance ended 1.2% lower at INR 1,375.55 on the National Stock Exchange.
Following are the Oct-Dec earnings estimates for Shriram Finance based on reports from nine brokerage firms in descending order by the estimate of net profit:
|
BROKERAGE |
NET INTEREST INCOME (in INR million) |
NET PROFIT (in INR million) |
|
JM Financial Institutional Securities Pvt Ltd |
58,198.00 |
35,191.00 |
|
Kotak Institutional Equities |
55,770.00 |
31,484.00 |
|
Nirmal Bang Equities Pvt Ltd |
56,534.00 |
22,421.00 |
|
Nomura Equity Research |
58,500.00 |
21,400.00 |
|
Elara Securities (India) Pvt Ltd |
58,226.00 |
21,359.00 |
|
Motilal Oswal Financial Services Ltd |
56,555.00 |
21,054.00 |
|
Axis Securities Ltd. |
56,550.00 |
21,020.00 |
|
Nuvama Wealth Management Ltd |
56,800.00 |
21,000.00 |
|
IDBI Capital Market Services Ltd |
56,069.00 |
20,951.00 |
|
Average |
57,022.44 |
23,986.67 |
End
Edited by Tanima Banerjee
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