Shriram Transport Finance Q1 Net Profit down 47% to Rs 170 Cr on Higher Bad Loan Provisioning

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Shriram Transport Finance, a non-banking finance firm, reported a 46.90 percent decline in standalone net profit to Rs 169.94 crore for the quarter ended June due to greater bad loan provisions. In the previous quarter, the lender had a net profit of Rs 320.06 crore.

The company’s Managing Director and CEO, Umesh Revankar, stated that the first quarter of FY22 data cannot be compared to the same quarter the previous year due to the ban.

‘Gross Stage 3 assets (NPAs) grew as a result of the second wave of COVID. As a result, we felt compelled to provide further provisions. We also believe that the passenger vehicle industry is still facing issues, therefore we made provisions for that,’ added Revankar. COVID provisioning of Rs 261.02 crore was made during the period.

The quarter’s net interest income (NII) increased 14.38 percent to Rs 2,107.45 crore from Rs 1,842.54 crore the previous year.

Gross Stage 3 assets increased to 8.18 percent from 7.98 percent previously. Net Stage 3 assets were 4.74 percent, down from 5.06 percent the year before. April, May, and June collections were 92 percent, 87 percent, and 94 percent, respectively.

‘We think July has been terrific so far, and we expect August and September to be even better.’ We should be able to lower our Stage 3 and Stage 3 levels in the future, and we should see better results,’ Revankar added. The lender has triggered resolution plans for eligible borrowers worth Rs 1,434.14 crore under the RBI’s Resolution Framework 2.0. In the first quarter, the institution restructured Rs 300 crore in loans, and it expects a similar amount in the second quarter.

Total assets under management (AUM) increased 6.75 percent to Rs 119,301.37 crore, up from Rs 111,756.37 crore the previous year.

STFC’s board of directors also approved periodic resource mobilisation through the issuing of debt securities, according to the company.

The company aims to offer such instruments in tranches on a private placement basis between August 1 and October 31, 2021, according to the company.

STFC is the Shriram Group’s flagship enterprise, specialising in commercial vehicle financing. Shriram Transport Finance closed at Rs 1,391.45, up 1.38 percent.

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