Shriram Finance Shares Surge 6% on Strong Q2 Results and Positive Broker Ratings

Shriram Finance Ltd (SFL) saw its shares jump 6% to Rs 794.70 following the announcement of its robust second-quarter results for the fiscal year 2023-24. The non-banking financial company (NBFC) reported a 7% year-on-year increase in consolidated net profit, along with improvements in key financial metrics and asset quality.

Financial Performance Highlights

SFL's financial results for Q2 FY24 showcased significant growth across various parameters:

Metric	Q2 FY24	Q2 FY23	YoY Change
Consolidated Net Profit	2314.00	2153.00	7.00
Total Income	11921.00	10097.00	18.00
Interest Income	11551.00	9815.00	17.70
Assets Under Management (AUM)	281000.00	-	15.70

Improved Asset Quality

The company's asset quality showed notable improvement:

Gross Non-Performing Assets (NPAs) declined to 4.57% from 5.32%
Net NPAs reduced to 2.49% from 2.64%

Broker Ratings and Target Prices

Following the results, several brokerages maintained positive ratings on Shriram Finance:

Brokerage	Rating	Target Price
Nuvama	Buy	870.00
Elara	Accumulate	801.00
InCred	Add	870.00
HDFC Securities	Add	750.00

Other Key Points

Credit costs remained steady at 1.95% of AUM
The company's strong performance and positive broker outlook contributed to the stock's significant price movement

Shriram Finance's robust Q2 results, coupled with improved asset quality and positive broker ratings, have reinforced investor confidence in the company's growth trajectory and financial stability.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
+0.01%	+10.06%	+18.62%	+26.66%	+26.51%	+404.78%

Shriram Finance Limited (SFL), one of India's largest retail asset financing NBFCs, has announced its financial results for the second quarter ended September 30, showcasing robust growth across key metrics.

Financial Performance Highlights

SFL reported a notable 11.39% year-on-year increase in Profit After Tax (PAT), which stood at Rs. 2,307.18 crores for Q2, compared to Rs. 2,071.26 crores in the same quarter last year. The company's Net Interest Income (NII) also saw a healthy growth of 11.77%, reaching Rs. 6,266.84 crores, up from Rs. 5,606.74 crores in Q2 of the previous year.

Key Financial Metrics

Metric	Q2 Current	Q2 Previous	YoY Change
Total Income	11,916.73	10,096.68	18.03%
Net Interest Income	6,266.84	5,606.74	11.77%
Profit After Tax	2,307.18	2,071.26	11.39%
Earnings Per Share (Basic)	12.27	11.02	11.34%

All financial figures in Rs. crores, except EPS in Rs.

Assets Under Management

SFL's Assets Under Management (AUM) witnessed significant growth, increasing by 15.74% to Rs. 2,81,309.46 crores as of September 30, compared to Rs. 2,43,042.55 crores a year ago.

Interim Dividend Declaration

The Board of Directors has declared an interim dividend of 240%, amounting to Rs. 4.80 per equity share of face value Rs. 2 each. The record date for dividend entitlement is set as November 07.

Asset Quality

The company's asset quality showed improvement, with Gross Stage 3 assets decreasing marginally by 0.22% year-on-year. However, Net Stage 3 assets increased by 10.10%, indicating a potential area for monitoring.

Segment-wise Performance

Commercial Vehicles continued to be the largest segment in SFL's portfolio, contributing 45.55% to the total AUM, followed by Passenger Vehicles at 21.17% and MSME loans at 14.44%.

Conclusion

Shriram Finance Limited's Q2 results demonstrate the company's resilience and growth potential in the retail asset financing sector. The significant increase in AUM, coupled with improved profitability, positions SFL well for sustained growth. However, investors should keep an eye on the slight increase in Net Stage 3 assets, which may require careful management in the coming quarters.

As SFL continues to expand its presence across India with a network of 3,225 branches and a customer base of over 96 lakh, it remains a key player in the NBFC sector, particularly in financing commercial vehicles and MSMEs.