Shriram Finance Apr-24

The rate at which the general price level of goods and services in an economy rises over a period of time.

A measure of the average change in prices paid by urban consumers for a basket of consumer goods and services.

A gauge of price changes in the wholesale market, reflecting the prices of raw materials and intermediate goods.

The interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks.

The total value of goods and services produced in a country over a specific period of time.

The amount of rainfall expected in a year, based on historical data.

The demand for goods and services in the rural areas of a country.

The measure of how much of a company's or country's productive capacity is being used.

The Goods and Services Tax (GST) collection in March 2024 was ₹1.78 lakh crore, representing an 11.5% increase compared to the same period in the previous year.

The total GST collected for the entire financial year 2023-24 (FY ‘24) was ₹20.1 lakh crore, marking an 11.7% increase over the previous year.

Commercial vehicle sales in Q4 FY ‘24 totaled 2.68 lakh units, slightly lower than the 2.79 lakh units sold in the previous year’s Q4. This decline was anticipated due to the upcoming national elections, where economic activity generally slows down.

The total commercial vehicle sales for the whole financial year FY ‘24 reached 9.68 lakh units, nearly the same as the 9.62 lakh units sold in the previous year.

The sales of Medium & Heavy Commercial Vehicles (M&HCVs) in Q4 FY ‘24 fell to 1.10 lakh units, down from 1.18 lakh units in the previous year’s Q4.

The sales of Light Commercial Vehicles (LCVs) in Q4 FY ‘24 stood at 1.58 lakh units, a slight decrease from the 1.61 lakh units sold in the previous year’s Q4.

Passenger vehicle sales in Q4 FY ‘24 registered strong growth of 11.50%, reaching 11.36 lakh units compared to 10.18 lakh units in the same period of the previous year.

Two-wheeler sales in Q4 FY ‘24 witnessed a significant growth of 24.9%, with 45.04 lakh units being sold as against 36.05 lakh units sold in Q4 FY ‘23.

The amount of money earned from interest income after deducting interest expense.

The ratio of net interest income to average earning assets. It measures the profitability of a financial institution's lending operations.

The total value of all assets under management by a financial institution.

Profit after tax is the net income of a company after deducting all expenses, including taxes. It is a measure of the company's profitability.

Earnings per share (EPS) is a measure of a company's profitability that shows how much profit is generated for each share of stock outstanding. It is calculated by dividing net income by the number of outstanding shares of stock.

Disbursement in finance refers to the payment of money by a financial institution to a borrower.

The growth in disbursement indicates an increase in the amount of money being loaned out by a financial institution.

AUM growth indicates that a financial institution is expanding its assets under management.

The cost of borrowing money, typically expressed as a percentage of the principal amount.

Short-term loans that a company takes out from banks or other financial institutions.

The interest rate that a financial institution charges its depositors for keeping their money with them.

A loan that a company receives from an international financial institution.

The currency of the country in which a company operates.

A type of vehicle that meets stricter emission standards.

The prediction of a company's future performance and its potential impact on its financial condition.

Maintaining a specific profit margin on each loan, often calculated as a percentage of the loan amount.

A strategy focused on offering small loans with higher interest rates, aiming to maximize profits.

A strategy of increasing the number of products sold to existing customers, like encouraging a loan customer to also take out an insurance policy.

A strategy focused on individual, small loans rather than large loans, aiming for consistency and stability.

The period just before elections, which can often slow down economic activity as businesses wait to see the outcome.

Spending on new equipment, factories, and infrastructure, often driven by government investment.

The primary aim of the company is to increase profits even if it means slowing down the overall growth in assets.

The amount of money a company sets aside to cover potential losses from borrowers who may not repay their loans. Higher provisioning indicates a greater risk of bad debts.

In this case, Shriram Finance set aside Rs. 456 crore in incremental provisioning to prepare for potential loan defaults.

The practice of writing off bad debts occurs when a lender determines that a borrower is unlikely to repay a loan. This amount is removed from the company's assets. In this instance, Shriram Finance wrote off Rs. 805 crore in bad debts.

Used vehicle prices are going up due to a shortage of new vehicle sales in the past and a continued strong demand for used vehicles. This increase in used vehicle prices is a positive factor for Shriram Finance's commercial vehicle (CV) portfolio.

Shriram Finance anticipates its commercial vehicle (CV) portfolio growing at a steady pace of 12% to 15% in the coming years. This growth is supported by the strong demand for used vehicles and the expected influx of newer vehicles into the used market in the future.

The supply of used vehicles is currently limited because of reduced new vehicle sales in the past (2019-2022). This shortage will take approximately 2 to 3 years to be rectified as newer vehicles age and enter the used vehicle market.

Shriram Finance sees a future with an abundance of used vehicles in the next 4 to 5 years, due to the expected increase in new vehicle sales over the past two years (2022-2023). This will create a larger pool of used vehicles for Shriram Finance to finance.

The demand for used commercial vehicles is expected to stay strong, driving an increase in the size of Shriram Finance's commercial vehicle financing business. The steady growth of the used vehicle market is expected to continue for several years.

Due to the projected strong demand and increasing supply of used commercial vehicles, Shriram Finance expects its commercial vehicle portfolio to grow at a steady pace. This consistent expansion will be fueled by the availability and demand for used vehicles in the market.