Companies

Shriram Transport Fin net profit drops 13% on higher finance costs

Satyanarayan Iyer Mumbai | Updated on January 29, 2014

Shriram Transport Finance Company (STFC) has posted a 13 per cent drop in its third quarter consolidated net profit as finance costs rose sharply for the commercial vehicle financier.

The non-banking finance company has posted a net profit of ₹325 crore in the three-month period ended December 31, 2013 against ₹375 crore a year ago.

The consolidated figures include the performance of the company’s commercial vehicle finance business, equipment finance business and its automall entity.

Finance costs rose 41 per cent to Rs 1,123 crore.

Umesh Revanker, Managing Director, STFC, said, “Average cost of finance rose to 10.98 per cent against 10.68 per cent, a year ago.”

He said that increase in provision levels and higher operating expenses also contributed to the drop in profits.

Outlook

Revankar said that he foresees better times in the current three-month period as a good rabi harvest means that commercial vehicle operators will be able to put their fleet to good use.

He, however, said that he does not expect fresh demand for new commercial vehicles.

The company’s non-performing loans value increased to ₹1,387 crore (3.56 per cent of total loans) against ₹1,254 crore (3.27 per cent of total loans) in the preceding quarter. After accounting for provisions, the NPA levels were at 0.75 per cent of total loans for the latest quarter.

Revankar also said that he expects the finance costs for the company to reduce by 10-15 basis points in the current quarter as it will securitise loans for banks as they rush to meet their priority sector targets.

Shares of the Mumbai-based financier ended at Rs 618, up 1.52 per cent on the Bombay Stock Exchange.

Published on January 29, 2014

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