Shriram Finance to borrow around Rs 60,000 crore by FY24 end, says MD & CEO YS Chakravarti

YS-Chakravarti

Non-banking finance company (NBFC) Shriram Finance is likely to borrow around Rs 60,000 crore by the end of the current financial year, YS Chakravarti, its managing director and chief executive officer, told Moneycontrol in an exclusive interview on October 27.

“We have mobilised about Rs 50,000 crore in the first half. So, since disbursements will be higher, we will probably be mobilising around Rs 60,000 crore in the second half of this fiscal,” Chakravarti said.

As of the second quarter of the current financial year, Shriram Finance’s total borrowing stood at Rs 1.65 lakh crore. Of the total, the majority is from term loans, followed by public deposits, non-convertible debentures, and securitisation.

The company raised 25.58 percent of its total borrowing through term loans, 24.68 percent through public deposits, 17.45 percent via non-convertible debentures, and 15.12 percent from securitisation.

Going ahead, Chakravarti said the company’s borrowing will be done through various instruments, including non-convertible debentures, public deposits, and securitisation, among others.

“Term loans will be the major contributor for this borrowing, which will be followed by NCDs, and retail deposits,” Chakravarti said.

In the July-September quarter, the non-banking firm saw a surge in borrowing through commercial papers, which Chakravarti attributed to the refinance of these securities.

“The increase in CP borrowing is refinance and some of them also come from DFIs (domestic financial institutions),” Chakravarti said.

As per its investor presentation, Shriram Finance raised Rs 1,781 crore through commercial papers during the July-September quarter.

Chakravarti added that the company has no short-term requirement and will not borrow short-term funds.

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Margin improves 

In the July-September quarter, Shriram Finance reported an expansion in net interest margin (NIM), which the CEO and MD attributed to the lower cost of borrowing and the liquidity buffer the company had.

The net interest margin stood at 8.93 percent in the second quarter of the current financial year, as compared to 8.26 percent in the same period last year.

In the previous quarter, the margin stood at 8.33 percent.

“There are two-three things. One is some of our earlier high-cost borrowings were redeemed and new borrowing has come in at lower cost. Second, some of the liquidity buffer, we have reduced it so the negative carry has come,” said Chakravarti.

In the next few quarters, he expects the net interest margin to sustain at these levels if borrowing costs do not go up substantially. “If the borrowing cost goes up, then we can see a 20-30 bps movement on the margin,” he said.

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Earnings card

On October 26, Shriram Finance reported a 12.6 percent on-year rise in its net profit to Rs 1,750.84 crore in the July-September quarter.

In the year-ago period, the NBFC reported a net profit of Rs 1,555.11 crore.

On a sequential basis, net profit grew 4.5 percent from the June quarter.

In the reporting quarter, interest income of the company grew to Rs 8,216 56 crore, from Rs 7,094.69 crore in the year-ago period.

On a standalone basis, the net interest income of the company for the second quarter rose 17.38 percent to Rs 4,818.18 crore as against Rs 4,104.86 crore in the same period of the previous year, said a company release.

In the reporting quarter, the asset quality of the NBFC improved, with its gross non-performing asset ratio stood at 5.79 percent, as compared to 6.31 percent in the year-ago period, and 6.03 in the quarter-ago period.

Similarly, the net NPA ratio stood at 2.80 percent as on September 30, as compared to 3.32 percent in the year-ago period and 2.96 percent in the quarter-ago period.