Shriram City Union Finance: Q1FY15 Result Analysis

The net profit of Shriram City Union Finance grew by 8.8% to Rs 127.72 crore in June’14 quarter as against Rs 117.42 crore in June’13 quarter. This was mainly on the back of increase in net sales which were up to Rs 846.45 crore in June’14 quarter as compared to Rs 791.82 crore in June’13 quarter, up 6.90% (YoY). Furthermore, the financing costs were also down by 3% to Rs 346.33 crore in June’14 quarter from Rs 335.97 crore in June’13 quarter (YoY). The EPS was down marginally from Rs 21.19 per share in June’14 quarter as compared to Rs 20.83 per share in same quarter last year.

The total expenses were up to Rs 323 crore in June’14 quarter from Rs 273.82 crore in June’13 quarter. This can be attributed to increase in employees benefit expenses which were up 85% (YoY), provisioning and writeoffs up 19% (YoY) and depreciation and amortization expenses up 86% (YoY).

The Net Interest Income for the June’14 quarter stood at Rs 500.11 crore as compared to Rs 435.86 crore in June’13 quarter, up 14.74% (YoY). The Net Interest Margin for the June’14 quarter stands at 13.47% as compared to 11.17 % for June’13 quarter. The Gross NPAs stood at 2.87% in June’14 quarter as compared to 2.29% in June’13. The capital adequacy ratio for the NBFC is at 29.24%. The Small Enterprises Finance business grew 12.4% (YoY) & the Two Wheeler loan book grew 30.7% (YoY). The loan against gold, Auto Loans & personal loans recorded a decrease of 38%, 20% & 13% respectively, compared to the previous year.
 
Mr. G. S. Sundararajan, Managing Director, Shriram City Union Finance, said, “In Q1 FY2015, Shriram City expanded its small enterprise lending business as well as two-wheeler financing business due to positive sentiments following a stable government formation. A major highlight of this quarter’s performance is that of Shriram Housing Finance wherein the sanctions have more than doubled whereas the disbursements have almost tripled as compared to Q1 FY 2014. In Q2 FY 2015, we are expecting stronger growth as the Union Government unveiled a slew of measures to revitalize the micro, small and medium enterprises sector, laying special thrust on promotion of start-ups. Shriram City is well aligned and best positioned to capitalize on the Government’s thrust of financing the MSME sector, which is the backbone of the economy and providing financial inclusion.”
 
Shriram City Union Finance is a non banking finance company (NBFC) which is a part of Chennai based Shriram Group. It has assets under management of Rs15028 crore as of June’14 quarter. It offers multiple loan products to small business owners, for acquiring assets like two wheelers, passenger vehicles and consumer durables. It also offers loan against gold.