Shriram Finance Jul-24

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Questions and Answers

What is the anticipated AUM growth guidance for FY'25?

12%

10%

20%

15% (correct)

What factor did not negatively impact credit uptake despite expectations?

Interest rate fluctuations

Global market changes

Election activity (correct)

Economic recession

What is being added to enhance gold lending?

More branches (correct)

Lower interest rates

New technology for loan processing

Online application processes

How has the overall credit uptake been characterized despite projected slowdown?

Good Signup and view all the answers

What specific area did Natraj Shankar inquire about regarding risk management?

MSME and non-vehicle finance Signup and view all the answers

What does Umesh Revankar suggest about future performance compared to the guidance?

It can be expected to be much better than the guidance. Signup and view all the answers

What was the primary reason for not changing the guidance despite fluctuations?

Smooth election process Signup and view all the answers

What aspect of leadership growth did Natraj Shankar seek clarification on?

Current status and future positioning of leadership Signup and view all the answers

What percentage of corporate channel business comes from the broker channel?

35% Signup and view all the answers

What is the average tenure of the deposits mentioned?

40 months Signup and view all the answers

What is the expected interest cost for the deposits?

8.3% Signup and view all the answers

How many branches were covered for MSME earlier before adding new ones?

550 branches Signup and view all the answers

Out of the total branches, how many branches were added for MSME in two years?

170 branches Signup and view all the answers

What is the target number of branches to be added for MSME over the next two years?

250 branches Signup and view all the answers

What is the total number of branches projected to conduct MSME after the new additions?

720 branches Signup and view all the answers

What is the overall cost expressed in basis points?

75 basis points Signup and view all the answers

What was the provision amount for the current quarter?

INR 588 crores Signup and view all the answers

Which loan type has the shortest average maturity period?

Gold loans Signup and view all the answers

What is the primary focus mentioned regarding the company's growth strategy?

Improving the product mix for bottom line Signup and view all the answers

Which factor was highlighted as important in influencing bottom line growth?

AUM growth Signup and view all the answers

What might negatively impact the expected growth in Q2 and Q3?

Seasonal fluctuations Signup and view all the answers

What does the company plan to do with smaller ticket loans?

Reduce their focus on these loans Signup and view all the answers

What is suggested about the relationship between AUM growth and bottom line growth?

AUM growth may not result in bottom line growth Signup and view all the answers

Who is the Company Secretary & Compliance Officer of Shriram Finance Limited?

U Balasundararao Uppu Signup and view all the answers

How long is the average maturity for personal loans mentioned?

18 months Signup and view all the answers

On what date was the earnings conference call held?

July 26, 2024 Signup and view all the answers

Which management position is held by Mr. Parag Sharma?

Managing Director & CFO Signup and view all the answers

What is the NSE symbol for Shriram Finance Limited?

SHRIRAMFIN Signup and view all the answers

What does 'listen-only mode' imply for participants during the earnings conference call?

Only the management can speak. Signup and view all the answers

What is included as an enclosure with the letter to BSE and NSE?

Transcript of the conference call Signup and view all the answers

Which of the following titles does NOT appear in the management list?

Chief Operations Officer Signup and view all the answers

What should participants do if they need assistance during the conference call?

Press star then zero on a touch-tone phone Signup and view all the answers

What aspect of the financial profile is considered strongest?

Asset quality with strong ECL cover Signup and view all the answers

What is the percentage of the capital position mentioned?

20% Signup and view all the answers

What is the primary reason rating agencies are waiting for additional information?

To analyze more financial data points over a year Signup and view all the answers

How do rating agencies typically favor companies during their assessments?

Based on ownership by large corporate entities Signup and view all the answers

Which financial result was congratulated during the dialogue?

Strong set of numbers Signup and view all the answers

What is one factor that is often not directly discussed with rating agencies?

Corporate structure as a shareholder Signup and view all the answers

What was the sentiment towards the macroeconomic situation discussed?

Reasonably stable Signup and view all the answers

What can be inferred about the relationship between rating agencies and the business?

Corporate reputation can impact ratings, though not always discussed. Signup and view all the answers

What are the factors contributing to the improvement in GS3 and GS2 according to Umesh Revankar?

Increased fleet utilization Signup and view all the answers

Why is it difficult to compare the ECL number with a seized vehicle?

The borrowers may enhance vehicle components Signup and view all the answers

What does the abbreviation GS3 refer to in this context?

Gross Stage 3 Signup and view all the answers

According to the discussion, what was one of the major causes for lesser disturbance during the elections?

Staging of election days Signup and view all the answers

How has the vehicle recovery process improved according to the participants?

Through more recovery efforts Signup and view all the answers

What impact did the state level elections have on business as discussed?

No impact at any time Signup and view all the answers

What is the relationship between cash flows of operators and recovery efforts?

Better cash flows lead to effective recovery efforts Signup and view all the answers

What does the acronym ECL stand for in the conversation?

Estimated Credit Loss Signup and view all the answers

Study Notes

Shriram Finance Limited Q1 FY25 Earnings Conference Call

Date: July 26, 2024
Key Management Personnel (KMP):
- Umesh G Revankar, Executive Vice Chairman
- Y S Chakravarti, Managing Director and CEO
- Parag Sharma, Managing Director & CFO
- S. Sunder, Joint Managing Director
- Ravi Subramanian, Managing Director and CEO, SHFL
- Sanjay Kumar Mundra, Executive Director

Financial Highlights

GDP Growth: India's GDP growth rate for FY24 was 8.2% compared to 7% in FY23. Q1 FY25 estimates are at 7.2%
Inflation:
- CPI Inflation (June 2024): 5.08.
- WPI Inflation (June 2024): 3.36%; highest in 16 months
RBI Monetary Policy: Repo rate was maintained at 6.5%.
Monsoon Outlook: IMD forecasts 106% of the long-period average rainfall during June-September. Significant rainfall is predicted for the coming 10 days, especially in the Southern Peninsula.

Business Performance

Disbursement Growth:
- Q1 FY'25: INR 37,709.79 crores (23.82% YoY growth)
- Q1 FY'24: INR 30,454.81 crores
Asset Under Management (AUM):
- Q1 FY'25: INR 2,33,443.63 crores (20.82% YoY growth)
- Q4 FY'24: INR 2,24,861.98 crores
Net Interest Income (NII):
- Q1 FY'25: INR 5,354.47 crores (20.63% YoY growth)
- Q1 FY'24: INR 4,438.68 crores
Profit After Tax (PAT):
- Q1 FY'25: INR 1,980.59 crores (18.21% YoY growth)
- Q1 FY'24: INR 1,675.44 crores
Earnings Per Share (EPS):
- Q1 FY'25: INR 52.70
- Q1 FY'24: INR 44.73
Credit Cost:
- Q1 FY'25: 1.87%
- Q1 FY'24: 1.62%

Specific Business Segments

Auto Industry:
- Commercial Vehicles (CVs) sales: 2.24 Lakh units (3.5% growth) vs 2.17 Lakh previous year.
- MSME segment: significant growth.

Additional Information

Auto Finance: Robust sales of passenger vehicles and two-wheelers.
Msme: major portion of loan given in service sector and trading.
Gold Loans: Disbursements have been impacted by adjustments in processes, and recent sales have been lower, impacting AUM. Higher gold prices haven't led to increased lending volumes.
Strategic Initiatives:
- Share sale of Shriram Housing Finance to Mango Crush Investment Limited.
Employee count:
- 30th June 2024: INR 75,813
- March 2024: INR 74,645
Cost of Funds: Stable at around 8.8%
Credit Risk: Improvement in asset quality, however stage one provisions have increased.
Securitization details: A significant part of this is in retail deposits, with capital market instruments, and external commercial borrowings (ECB).

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Description

This quiz explores various aspects of financial growth and credit uptake in the context of anticipated growth for FY'25 and leadership inquiries on risk management. Test your knowledge on corporate channels, deposit trends, and MSME branch expansions based on recent discussions and projections.