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News: Shriram Finance reported continued healthy business growth which was offset by elevated credit cost during the quarter. AUM grew 20.7% YoY to ₹ 2.14 lakh crore, driven by continued traction in CV business (13% YoY), strong disbursement in PV (30.7% YoY) and newer segment (32.8% YoY in gold loans and 65.4% YoY in personal loans). Steady margins at ~9% led 15% YoY growth in NII. However, higher opex (27.4% YoY) and elevated credit cost (36.2% YoY) kept earnings momentum subdued at 2.3% YoY to ₹ 1818 crore. Asset quality remained steady with Gross Stage 3 assets at 5.66% vs 5.79% in Q2FY24.
Views: While management has maintained long term growth guidance at 15%, actual momentum is expected to remain higher. Slippages seems to be higher keeping provision elevated in Q3FY24. Thus, trend of slippages and cost of funds to remain watchful.
Impact: Neutral