Shriram Finance
Shriram Transport Finance posted a not-so-good numbers for Q2FY14. This is one of the largest asset financing NBFC in the country and a downturn in its performance is a reflection of the sector and since commercial vehicles are stated to the barometer of the economy, show the poor state of the economy too. The company posted a 6% (YoY) rise in net interest income (NII) at Rs.969 crore and net profit is at Rs.352 crore, down 3%. The fall in profit was on the back of rise in bad loans and write-offs. Gross bad loans increased to 3.27% v/s 3.09% (YoY). Provisions and write-offs were up by 25% at Rs.265 crore.
Total assets under management as at 30th Sept 2013 stood at Rs.56,993 crore, up 23%. The rise in bad loans indicates that borrowers are delaying repayment. The commercial vehicles segment is going through some tough times with consistently falling sales and this has led to truckers skipping payment to lenders. If the same trend persists, bad loans could only go up further. The company raised its lending rates by 50 bps ]to 17% in August but the effect of the same is yet to reflect in the numbers. Hopefully, festive demand should boost business but the issue on bad loans could remain going ahead for a feew more quarters.