Shriram Finance Share Price Surges 9% After Q2 Results, Declares 200% Interim Dividend

On October 26, Shriram Finance Ltd announced its financial results for the July-September quarter, reported a 12.6% year-on-year increase in net profit, reaching ₹1,750.84 crore, up from ₹1,555.11 crore in the same period last year. On a sequential basis, net profit grew by 4.5% from the preceding June quarter. interest income grew to ₹8,216.56 crore, compared to ₹7,094.69 crore in the same period a year ago.

Net Interest Income

The Net Interest Income (NII) of Shriram Finance on a standalone basis for the second quarter ending on September 30 increased by 17.38% to ₹4,818.18 crore from ₹4,104.86 crore in the same period of the previous year. Similarly, on a consolidated basis, NII increased by 18.80% year-on-year, reaching ₹4,969.39 crore.

Asset Quality Improvement

Shriram Finance also reported an improvement in asset quality, with the gross non-performing asset (NPA) ratio standing at 5.79%, down from 6.31% in the previous year and 6.03% in the preceding quarter. The net NPA ratio stood at 2.80% as of September 30, compared to 3.32% a year ago and 2.96% in the previous quarter. The NPA provision coverage ratio for the company was 53.10%, higher than the previous year.

Liquidity and Stock Performance

The Liquidity Coverage Ratio stood at 219.57% in the July-September quarter, showing stability despite a slight decrease compared to the previous year. Shriram Finance's stock was trading at ₹1,960.3 on the National Stock Exchange, representing a 9% increase from the previous close. Over the past year, the stock has gained more than 56%, and year-to-date, it has surged by over 40%.

Analysts' Outlook & Dividend Declaration

Several analysts consider Shriram Finance's stock valuation to be appealing at this point. 

Shriram Finance declared an interim dividend of 200%, or ₹20 per equity share, for the financial year 2023-24, record date for eligible shareholders for the dividend payout is November 6, and the dividend will be credited on or before November 25.

For the year ending March 2023, Shriram Finance had declared an equity dividend of 350.00%, amounting to ₹35 per share. Company has consistently maintained a good dividend track record over the past five years.

Previous Dividend 

Final Words

Shriram Finance reported robust Q2 results, showing increased net profit and interest income, improved asset quality, and strong liquidity. Analysts are optimistic about the company's future prospects, and it has declared a dividend for the financial year 2023-24. The stock has also performed well in the market.