Concall Summary: Shriram Transport Finance Company Ltd Q4FY20

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Business overview

  • AUM at Rs 109,749 crores vs Rs 104,482 crores YoY; up 5.04%  
  • Q4FY20 NII at Rs 1,917 crores vs Rs 1,902 crores YoY
  • NIM for Q4FY20 was 6.76% vs 7.14% QoQ; full year NIM was 7.06%

Participants

  • Elara
  • Emkay
  • B&K Securities
  • HDFC Securities
  • DSP Mutual Fund
  • DoorDarshi Advisors

Concall Highlights

  • India likely to have normal monsoon this year; as per the Indian Meteorological Department (IMD) rainfall likely to be 100% of the long term average
  • Heavy commercial vehicle sales have been impacted due change in axle load norms, extended monsoon, lack of clarity regarding the discount on BS-4 vehicle and pricing of BS-6 vehicle
  • MHCV sales for the year fell by 42% from 3.9 lakh units to 2.24 units and LCV fell by 20.06% from 6.17 lakh units to 4.93 lakh units
  • Company has made a COVID related provision of Rs 909.6 crore during the quarter
  • Stage 3 NPA stood at 8.36% vs 8.37% YoY. Overall credit cost for Q4 at 3.82%; ex-COVID at 0.74%.  Full-year credit cost at 2.43% and ex-COVID 1.64%
  • Shriram Transport Finance Company Ltd (STFCL) has borrowed Rs 800 crores from banks in April and May
  • Debt repayment would be around Rs 4,000 crore per quarter
  • The moratorium for June quarter would be Rs 10,000 crores and a similar amount for September quarter
  • STFCL didn’t apply for the moratorium when RBI announced the first moratorium as the company had enough liquidity but post announcement of second moratorium company has applied for a moratorium from banks. 8-9 banks have already given their consent for the moratorium
  • Tractor portfolio is around 3-3.5% of the total book; the growth rate would be higher this year in this segment. Ticket size is Rs 1.5 lakh as STFCL only financed used tractors
  • The ticket size of HCV is 3-4 times higher than LCV or tractors
  • RBI has fixed the limit of foreign borrowings at USD 750 million per year, the entire limit is available for the current year
  • All the demands and inquiries are coming from the rural market
  • Credit cost may increase to 3% for FY21 but it will settle at around 2% going forward
  • Rs 2,369 crores worth of loan has been securitized during Q4
  • STFCL used to lend at 70% LTV but post-October 2018 LTV has been reduced to 65%. LTV for new vehicle at 75-80%
  • 30% of customers in April and 50% of customers in May were able to utilize their vehicle; utilization has further improved to 70% in the first week of June. Only inter-state vehicles are not able to utilize their vehicle properly
  • The contribution of the public deposit will increase as all branches are now taking deposits. The deposit rate has been reduced by 30-40 bps. Public deposit rate starts from 7.6%
  • The incremental cost of fund is around 8.5-9%
  • As on 31st March 2020 Stage-1 was 80.43%, Stage-2 was 11.21% and Stage-3 was 8.36% respectively
Also Read on FinMedium:  Concall Summary: United Breweries Ltd Q4FY20

Image source : Company website

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Karan Sharma

Karan Sharma

The Concall Summary Guy | CFA | Investor
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