Shree Investment Finance Q4 Results: Revenue Slows but Profitability Improves

Shree Investment & Finance Company Ltd. (SIFC) has released its audited financial results for the fourth quarter of FY 2024/25, showing weaker revenue performance but stronger profitability and stable asset quality.

The company reported total revenue of Rs. 828.28 million in Q4, down 24.04% year-on-year compared to Rs. 951.25 million in Q4 of 2023/24. Sequentially, revenue also fell slightly from Rs. 648.36 million in Q3. Despite the revenue contraction, the company improved its efficiency, reflected in higher profitability margins.

The gross profit stood at Rs. 233.18 million, delivering a margin of 28.15%, slightly below Q3’s 29.35% but well above Q4 last year’s 22.33%. This shows that SIFC has successfully managed operational costs even in the face of declining revenues.

Net income surged to Rs. 69.93 million in Q4, up from Rs. 49.11 million in Q3 and Rs. 66.84 million in the same quarter last year. The net profit margin rose to 8.44%, compared to 7.57% in Q3 and 7.03% in Q4 of the prior year, showing consistent improvement in profitability.

Return ratios remained modest but stable. Return on Assets (ROA) stood at 0.73%, slightly down from 0.90% in Q3 but close to last year’s 0.76%. Return on Equity (ROE) came in at 5.07%, compared to 6.25% in Q3 and 5.02% in Q4 of 2023/24.

On a per-share basis, EPS (annualized) improved to Rs. 6.99, compared to Rs. 6.81 in the same quarter last year, while the reported PE ratio stood at 77.73, suggesting the stock is trading at a premium relative to earnings.

From a balance sheet perspective, the book value per share increased to Rs. 142.23, while the market value per share reached Rs. 543.54, almost 3.8x book value. This indicates continued investor optimism despite lower revenue growth.

Financial Sector Indicators

• Capital Fund to RWA stood at 18.07%, comfortably above regulatory minimums.

• NPL ratio improved to 2.57%, compared to 3.75% in Q3 and 2.86% last year, showing stronger asset quality.

• Loan loss coverage rose to 107.26%, highlighting conservative provisioning.

• Cost of funds declined to 6.50%, from 9.00% a year ago, improving efficiency.

• Base rate dropped to 8.18%, from 10.99% last year, supporting lower lending costs.

• Net interest spread was at 4.01%, slightly lower than 4.49% a year ago, but still healthy.

• Net liquid assets stood at 35.50%, reflecting a strong liquidity buffer.

Dividend per share was Rs. 1.96 in FY 2023/24, but no dividend announcement has been made yet for FY 2024/25.