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Shares of Shriram Transport Finance Company fell 4.8 per cent on Thursday after it reported a 70 per cent year-on-year slump in its March quarter net profit to Rs 223.38 crore.
At 02:30 pm, the stock was at Rs 629.40 down nearly 1 per cent from its previous close, while the benchmark Sensex was down 1.9 per cent at 33604.72.
Total income during the March quarter grew 7.5 per cent to Rs 4,173.04 crore from Rs 3,883.38 crore in the year-ago period . The business has picked up in the rural markets also due to the harvest season. In spite of the moratorium, the company has been able to collect from 84 per cent of the borrowers in March, 23 per cent in April and 52 per cent in May. The stock is trading at 0.7 times FY2022E price adjusted book value and 5.1 times FY2022E Price earnings’. The brokerage has a buy rating on the stock.
‘The company has used relevant indicators of moratorium, considering various measures taken by government and other authorities along with an estimation of potential stress on probability of defaults and loss given defaults due to covid-19 situation. It has made additional expected credit loss provision of Rs 909.64 crore on account of covid-19 impact in the financial statement’, the non-bank lender said in a release.
Gross non-performing assets (NPAs) were the lowest in last five quarters at 8.37 per cent for the March quarter against 8.78 per cent in the December quarter. As of March, the company’s gross stage 3 loans saw a slight decline to 8.5 per cent of loans. The board has declared an interim dividend of Rs 5 per equity share of Rs 10 each for the financial year 2019-20 in order to conserve cash resources to face challenges and contingencies created by covid-19.
