(Reuters) – India’s Shriram Finance reported a more than 14% increase in adjusted quarterly profit on Friday, boosted by strong demand for business and vehicle loans.
The non-banking finance company (NBFC) reported a standalone adjusted profit of 20.80 billion rupees ($241.3 million) for the third quarter ended Dec. 31, compared to 18.18 billion rupees a year ago.
Adjusted profit does not include the additional 14.9 billion rupees in gains after the company sold its stake in the unit Shriram Housing Finance.
Net profit, including the additional gain, rose 96% to 35.7 billion rupees.
Although both banks and non-banking finance companies in India are seeing signs of asset quality stress, led by sectors such as microfinance, credit cards and personal loans, Shriram Finance’s portfolio has held up better, analysts said.
About 70% of the company’s used commercial vehicle loans are made to existing customers or people referred by existing customers, Jefferies said in a note.
Commercial vehicle loans increased by 13% while loans to medium and small businesses grew by 50%. Loans from the passenger vehicle segment rose about 25%.
The three segments account for nearly 80% of the company’s total assets under management (AUM), which rose almost 19% to 2.54 trillion rupees in the third quarter.
The company’s net interest income, the difference between interest earned on loans given out and paid on funds borrowed, rose 14.31 % to 58.22 billion rupees.
However, its financing costs in the third quarter rose about 28%.
In November 2023, India’s central bank asked banks to set aside additional capital against loans to NBFCs, making borrowing more expensive for them.
Ratings agency Moody’s said in a report last May that NBFCs could see moderation in profitability in 2025 as a result.
Shriram Finance’s shares closed largely flat on Friday.
(Reporting by Nishit Navin and Ananta Agarwal in Bengaluru; Editing by Eileen Soreng)
