{"id":177393,"date":"2026-01-23T08:45:12","date_gmt":"2026-01-23T13:45:12","guid":{"rendered":"https:\/\/alphastreet.com\/india\/?p=177393"},"modified":"2026-01-26T10:42:57","modified_gmt":"2026-01-26T15:42:57","slug":"shriram-finance-beats-quarterly-profit-view-on-strong-vehicle-lending-growth","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/shriram-finance-beats-quarterly-profit-view-on-strong-vehicle-lending-growth\/","title":{"rendered":"Shriram Finance beats quarterly profit view on strong vehicle lending growth"},"content":{"rendered":"\n

Shriram Finance Limited (NSE) SHRIRAMFIN reported a 29% YoY fall in its December quarter standalone net profit at INR2,522 crore compared to INR3,570 crore reported in the year ago period. The NBFC’s net interest income (NII) in Q3FY26 increased 16% to INR6,764 crore compared to INR5,823 crore in the corresponding quarter of the last financial year.<\/p>\n\n\n\n

Key Insights & Context<\/h2>\n\n\n\n

<\/p>\n\n\n\n

Profit Context: The 29.4% drop in Net Profit is primarily due to a one-time gain of \u20b91,489.39 crore recorded in Q3 FY25 from the sale of its stake in Shriram Housing Finance. Excluding this exceptional item, the normalized profit grew by approximately 21% YoY.<\/p>\n\n\n\n

Asset Quality: The company saw a marginal improvement in its asset quality.<\/p>\n\n\n\n

Gross NPA: 4.54% (vs. 4.57% in Q2 FY26).<\/p>\n\n\n\n

Net NPA: 2.38% (vs. 2.49% in Q2 FY26).<\/p>\n\n\n\n

MUFG Investment: The Board approved a major preferential issue of equity shares to MUFG Bank Ltd to raise approximately \u20b939,618 crore. This investment is expected to significantly reduce the company’s cost of funds and support future loan book expansion.<\/p>\n\n\n\n

Credit Rating Upgrades: Following the MUFG deal and strong performance, several agencies upgraded Shriram Finance\u2019s ratings, including CARE (AAA Stable) and S&P Global (BBB-).<\/p>\n\n\n\n

New Labor Code Impact: Results were slightly affected by a \u20b9197 crore incremental impact on employee benefits (gratuity and compensated absences) due to the new definition of wages under the New Labor Codes.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Management Commentary & FY27 Outlook<\/h2>\n\n\n\n

The leadership team, led by Vice Chairman Umesh Revankar, highlighted several key strategic shifts:<\/p>\n\n\n\n

Accelerated Growth Guidance: Management has raised its growth guidance to 18\u201320% for FY27 (up from the previous 15\u201316%). This acceleration is primarily driven by the deployment of the INR39,618 crore capital from MUFG Bank.<\/p>\n\n\n\n

Cost of Funds: With the recent S&P rating upgrade to ‘BBB-‘ (Investment Grade) and the MUFG partnership, the company expects a significant reduction in borrowing costs, which should help protect Net Interest Margins (NIMs) even if interest rates remain volatile.<\/p>\n\n\n\n

Segment Focus: While Commercial Vehicle (CV) finance remains the backbone, the focus for FY27 will shift heavily toward Gold Loans, MSME lending, and Passenger Vehicle finance to diversify the risk profile.<\/p>\n\n\n\n

Digital Transformation: The company is investing in AI-driven credit scoring to speed up loan approvals in the rural and semi-urban segments, aiming to capture a larger share of the “unbanked” market.<\/p>\n\n\n\n

Strategic Significance of the MUFG Deal<\/h2>\n\n\n\n

The investment of nearly $4.4 billion by MUFG Bank is a watershed moment for Shriram Finance. Beyond the capital, it provides:<\/p>\n\n\n\n

Global Best Practices: Alignment with international governance and operational standards.<\/p>\n\n\n\n

Tier-1 Capital Boost: Expected to lift the Tier-1 ratio to approximately 30%, making it one of the most well-capitalized NBFCs in India.<\/p>\n\n\n\n

Competitive Edge: The lower cost of funds allows them to compete more aggressively with banks in the prime lending segments.<\/p>\n\n\n\n

Investor Takeaway<\/h2>\n\n\n\n

For investors, Shriram Finance’s Q3 FY26 results represent a “clean” quarter that sets the stage for a massive transformation in the coming fiscal year. The headline profit drop is a distraction; the core business metrics (NII, AUM, and Asset Quality) are all trending in the right direction.<\/p>\n","protected":false},"excerpt":{"rendered":"

Shriram Finance Limited (NSE) SHRIRAMFIN reported a 29% YoY fall in its December quarter standalone net profit at INR2,522 crore compared to INR3,570 crore reported in the year ago period. The NBFC’s net interest income (NII) in Q3FY26 increased 16% to INR6,764 crore compared to INR5,823 crore in the corresponding quarter of the last financial […]<\/p>\n","protected":false},"author":2383,"featured_media":125416,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[1,1941,392],"tags":[8265],"class_list":["post-177393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-stocks","category-stock-analysis","category-earnings","tag-finance"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2021\/11\/Earnings-Coverage.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":144438,"url":"https:\/\/alphastreet.com\/india\/shriram-finance-q4fy23-revenue-soars-by-57-while-profit-rises-20\/","url_meta":{"origin":177393,"position":0},"title":"Shriram Finance Q4FY23 revenue soars by 57% while profit rises 20%","author":"Chirag Gupta","date":"April 28, 2023","format":false,"excerpt":"Shriram Finance reported Total revenue for Q4 FY23 of \u20b97,966 Crore, up from \u20b95,082 Crore year on year depicting a growth of 57%. 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