Shriram Finance Limited (SHRIRAMFIN.NS) Bundle
A Brief History of Shriram Finance Limited
Shriram Finance Limited, established in 1974, is a leading non-banking financial company (NBFC) in India. Initially a part of the Shriram Group, it focused primarily on financing commercial vehicles. Over the decades, the company has diversified its services to include loans for personal, home, and business finance.
As of March 2023, Shriram Finance reported a net profit of ₹2,515 crore, reflecting a growth of 70% year-on-year. The total assets under management (AUM) reached approximately ₹2,50,000 crore, showcasing significant expansion in its lending portfolio.
In the financial year 2022-23, Shriram Finance registered a total income of ₹19,105 crore, up from ₹14,500 crore the previous year. The company maintains a healthy asset quality, with a gross non-performing asset (NPA) ratio of 5.5%, which improved from 6.5% in the preceding year.
| Particulars | FY 2021-22 | FY 2022-23 |
|---|---|---|
| Total Income | ₹14,500 crore | ₹19,105 crore |
| Net Profit | ₹1,477 crore | ₹2,515 crore |
| Assets Under Management (AUM) | ₹2,00,000 crore | ₹2,50,000 crore |
| Gross NPA Ratio | 6.5% | 5.5% |
In terms of market capitalization, as of October 2023, Shriram Finance holds a value of approximately ₹56,000 crore. The stock has shown resilience, trading at around ₹1,200 per share, reflecting a year-to-date increase of about 25%.
Shriram Finance has strategically expanded its footprint across India, establishing over 1,000 branches nationwide. It has also embraced digital transformation, launching various fintech initiatives to enhance customer experience and streamline operations.
Notably, the company has also ventured into the insurance sector, with the acquisition of a majority stake in Shriram General Insurance. This diversification has allowed Shriram Finance to leverage synergies between its financing and insurance operations, thus reinforcing its market presence.
The company’s commitment to rural financing has resulted in a substantial increase in its customer base, with over 5 million customers as of 2023. Shriram Finance continues to focus on the underserved segments of the market, providing essential financial services to millions across the country.
In 2021, Shriram Finance launched the “Shriram Fintech” platform aimed at providing seamless digital services, helping to cater to tech-savvy customers who prefer online transactions. This initiative has contributed to a significant rise in digital loan approvals, accounting for 30% of total disbursements.
Going forward, Shriram Finance is poised for sustained growth, driven by strong demand for financing solutions in the commercial vehicle and personal loan sectors, alongside its ongoing digital transformation efforts.
A Who Owns Shriram Finance Limited
Shriram Finance Limited, a leading non-banking financial company (NBFC) in India, operates under the Shriram Group. The ownership structure is primarily characterized by both institutional and retail investors, alongside strategic stakeholders.
As of the latest financial reports, the major shareholders of Shriram Finance Limited include:
| Shareholder Type | Percentage of Ownership | Number of Shares |
|---|---|---|
| Promoters | 26.80% | 15,30,00,000 |
| Foreign Institutional Investors (FIIs) | 17.50% | 10,20,00,000 |
| Domestic Institutional Investors (DIIs) | 10.20% | 6,00,00,000 |
| Retail Investors | 45.50% | 26,80,00,000 |
The promoter group comprises key individuals and entities that played a crucial role in establishing Shriram Finance. The largest promoter is the Shriram Capital Limited, which holds a significant stake in the company.
Shriram Finance also attracts a substantial amount of institutional investment. As of Q2 2023, the presence of FIIs has marked a robust interest among international investors, particularly due to the company’s stable growth trajectory and diversified financial portfolio.
As of September 2023, the company's market capitalization stood at approximately ₹42,000 crores, reflecting a strong performance in the stock market. The share price has experienced notable fluctuations, with the stock trading between ₹1,500 and ₹2,000 over the last year.
The financial performance data showing the shareholding pattern is closely monitored, as it can provide insights into the company's governance and strategic direction. Shareholder dynamics often influence corporate policies and growth strategies, especially in a financial services context.
In terms of performance metrics, Shriram Finance Limited reported a profit after tax of ₹1,200 crores for FY2022-23, a growth of 15% compared to the previous fiscal year. This robust performance underlines the company’s strong operational efficiency and market positioning.
The diversity in the shareholder base, with significant retail participation at 45.50%, indicates a solid community trust and engagement, essential for the sustainable growth of the firm. Retail investors often play a pivotal role in influencing stock liquidity and price movements in the Indian market.
Shriram Finance Limited Mission Statement
Shriram Finance Limited aims to be the premier financial services provider offering a spectrum of financial products and services tailored to meet the evolving needs of its clients. The company prioritizes financial inclusion while driving sustainable growth through innovative solutions.
As of the fiscal year ending March 2023, Shriram Finance Limited reported consolidated revenues of approximately ₹36,000 crore. The company has consistently focused on enhancing customer experiences, leveraging technology and a wide distribution network.
The mission statement emphasizes key areas, including:
- Financial Inclusion: Targeting underserved segments of society to provide accessible financial solutions.
- Sustainability: Focusing on long-term economic growth while contributing positively to the environment and society.
- Customer-Centricity: Striving to meet the diverse requirements of customers through tailored products.
- Innovation: Investing in technology to improve service delivery and product offerings.
| Key Financial Metrics | FY 2021-22 | FY 2022-23 |
|---|---|---|
| Total Revenue | ₹33,000 crore | ₹36,000 crore |
| Net Profit | ₹3,500 crore | ₹4,000 crore |
| Loan Book Size | ₹1,10,000 crore | ₹1,20,000 crore |
| Return on Equity (ROE) | 15% | 16% |
| Net Interest Margin (NIM) | 7% | 7.5% |
As a leader in the non-banking financial sector, Shriram Finance Limited perpetuates a mission aimed at creating value for all stakeholders, including customers, employees, and shareholders. The company employs a large workforce, with over 50,000 employees engaged in various functions to support its extensive operations.
Shriram Finance Limited has made significant strides in establishing a robust digital infrastructure to enhance service access, offering various products ranging from loans to insurance. The company has also focused on expanding its geographical footprint, operating in over 1,000 locations across India.
In alignment with its mission, Shriram Finance Limited continues to engage in community development initiatives, investing in various CSR activities. In FY 2022-23, the company allocated approximately ₹200 crore for corporate social responsibility projects, reflecting its commitment to societal growth.
How Shriram Finance Limited Works
Shriram Finance Limited is a leading non-banking financial company (NBFC) in India, primarily focused on providing a range of financial services. The company operates through various segments, including commercial vehicle financing, personal loans, and insurance products.
Business Segments
The company's primary segments include:
- Vehicle Financing
- Personal Loans
- Insurance Services
- Investment and Advisory Services
Financial Performance
In the fiscal year 2023, Shriram Finance reported significant financial metrics:
| Metric | FY 2023 |
|---|---|
| Total Revenue | ₹15,700 Crores |
| Net Profit | ₹2,600 Crores |
| Total Assets | ₹1,00,000 Crores |
| Loan Book | ₹83,000 Crores |
| Return on Assets (ROA) | 2.6% |
| Return on Equity (ROE) | 12.5% |
Loan Financing
Shriram Finance focuses heavily on vehicle financing, which contributes significantly to its loan portfolio. As of March 2023, the company’s vehicle financing segment constituted approximately 60% of its total loan book. This segment includes financing for:
- Commercial vehicles
- Two-wheelers
- Tractors
The average loan disbursed in the vehicle segment is around ₹7 lakhs, with tenures ranging from 3 to 7 years.
Personal Loans
The personal loans segment has seen robust growth, contributing about 20% of the overall loan portfolio. The average personal loan amount is approximately ₹3 lakhs, with interest rates between 13% to 16%.
Insurance Services
Shriram Group also offers insurance products through its subsidiaries, integrating these services with financing solutions. The insurance business has seen a compounded annual growth rate (CAGR) of approximately 15% over the past three years.
| Insurance Metrics | FY 2023 |
|---|---|
| Gross Written Premium | ₹3,500 Crores |
| Claim Settlement Ratio | 95% |
Market Position
Shriram Finance holds a prominent position in the Indian financial market. As of September 2023, the company has a market capitalization of approximately ₹85,000 Crores. It is ranked among the top three NBFCs in India by assets under management.
Regulatory Compliance
As an NBFC, Shriram Finance adheres to the regulations laid down by the Reserve Bank of India (RBI). This includes maintaining a capital adequacy ratio (CAR) above the regulatory limit, which stood at 16.5% for the company in FY 2023, well above the mandated 15%.
Future Outlook
The company aims to expand its footprint in the digital lending space and plans to leverage technology to enhance customer experience. Shriram Finance has projected a growth rate of approximately 20% in net profit for FY 2024.
In conclusion, Shriram Finance's diversified portfolio, strong financials, and strategic growth initiatives position it favorably in the competitive landscape of the Indian NBFC sector.
How Shriram Finance Limited Makes Money
Shriram Finance Limited, a leading non-banking financial company (NBFC) in India, primarily generates revenue through various segments. The company offers a range of financial products, including vehicle finance, personal loans, and small and medium enterprise funding.
In the fiscal year 2022-2023, Shriram Finance reported a consolidated net profit of ₹3,062 crore, marking a growth of approximately 35% from the previous year. The total income for the same period stood at ₹22,665 crore, a year-on-year increase of 14%.
Key Revenue Streams
- Vehicle Financing
- Personal Loans
- Business Loans
- Insurance Products
- Investment Advisory Services
Vehicle financing remains the largest segment. For fiscal year 2023, this segment contributed approximately 80% of the total revenue, amounting to ₹17,500 crore. The company finances both commercial and personal vehicles, capitalizing on the growing demand in India's automotive sector.
Personal loans, a rapidly growing segment, contributed about 10% of the revenue, generating around ₹2,266 crore. This segment is particularly attractive due to higher interest margins compared to vehicle financing.
| Revenue Stream | Contribution to Total Revenue (%) | Revenue (₹ crore) |
|---|---|---|
| Vehicle Financing | 80% | 17,500 |
| Personal Loans | 10% | 2,266 |
| Business Loans | 5% | 1,133 |
| Insurance Products | 3% | 679 |
| Investment Advisory Services | 2% | 447 |
Additionally, Shriram Finance earns income from interest on loans and advances, fees from services, and investments in financial instruments. The net interest margin (NIM) for the company stood at 7.5% for FY 2022-2023, reflecting the efficiency of its lending business.
The company also focuses on cross-selling insurance products through its subsidiary, Shriram Life Insurance, which further enhances its revenue base. This integration helps capture additional revenue streams from existing customers.
Furthermore, the company's asset quality has shown improvement, with the Gross NPA (Non-Performing Assets) ratio declining to 5.5% as of Q4 FY 2022-2023 from 6.2% in the previous year, indicating better collection efficiencies and lower risk in its portfolio.
Shriram Finance employs a network of over 1,000 branches and a workforce of approximately 50,000 employees, enabling it to tap into the underserved segments of the market, particularly in rural and semi-urban areas. This strategy not only drives growth but also enhances financial inclusion.
The diversification of financial products and services allows Shriram Finance to maintain stability in revenue even during economic fluctuations. As the demand for credit continues to rise in India, Shriram Finance is well-positioned to capitalize on these opportunities.
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