Shriram Finance Reports Strong Q1 FY26 Performance with Growth in AUM, PAT, and Improved Asset Quality
This announcement includes comprehensive Q1 FY26 financial results, asset quality details, management commentary on economic factors, segment-wise performance, and future guidance on NIM and credit costs. Such detailed financial and operational updates are highly material for investors, directly influencing their perception of the company's performance and future prospects.
The company reported strong growth in disbursements, AUM, NII, and PAT. Asset quality improved with lower gross and net Stage-3 NPAs, and credit costs declined. Management provided a positive outlook, expecting NIM improvement and maintaining stable credit costs, along with confident views on business segment growth despite minor seasonal fluctuations.
Shriram Finance Limited announced its Q1 FY26 results, highlighting robust operational and financial performance:
* Financial Highlights (Q1 FY26 vs Q1 FY25): * Disbursements grew by 13.01% year-on-year to ₹41,816.75 crore. * Assets Under Management (AUM) as of June 30, 2025, increased by 16.62% year-on-year to ₹2,72,249.01 crore. * Net Interest Income (NII) rose by 12.55% year-on-year to ₹6,026.43 crore. * Profit After Tax (PAT) grew by 8.84% year-on-year to ₹2,155.73 crore. * Earnings Per Share (EPS) stood at ₹11.46. * Net Interest Margin (NIM) was 8.11% (down from 8.79% in Q1 FY25).
* Asset Quality: * Gross Stage-3 improved to 4.53% (from 5.39% in Q1 FY25). * Net Stage-3 improved to 2.57% (from 2.71% in Q1 FY25). * Credit cost on total assets stood at 1.64% (improved from 1.87% in Q1 FY25). * Management noted a seasonal increase in Stage-2 assets due to early monsoon but expects most customers to roll back, maintaining credit cost under 2% for the full year.
* Resource Raising & Liquidity: * Cost of liabilities decreased by 7 basis points to 8.88%. * Incremental cost of funds substantially reduced from 8.86% to 8.37%. * Liquidity coverage ratio was 268.74%, covering 5 months of liability repayment. The company plans to reduce this excess liquidity to a target of 3 months within 3-4 months.
* Segmental Disbursements (Q1 FY26): * Commercial Vehicles: ₹16,917 crore * Passenger Vehicles: ₹8,162 crore * MSME: ₹6,358 crore * Gold Loans: ₹3,291 crore * Two-wheelers: ₹3,081 crore * Personal Loans: ₹2,205 crore * Farm Equipment: ₹1,273 crore * Construction Equipment: ₹526 crore
* Management Commentary & Outlook: * Economic Outlook: India's GDP grew at 6.5% in FY25, with consumer inflation easing to 2.10% in June 2025. RBI cut repo rate by 50 bps to 5.50%. Monsoon forecasted 9% above normal, supporting rural consumption. * MSME: Expects pickup in demand in Q2 and Q3, confident of meeting full-year guidance. Focus on smaller ticket, trading, and services sectors with steady business. * Trucking Activity: Remains healthy with good freight rates and utilization levels due to no excess capacity. * Car Market: Entry-level car demand shifting to used cars and compact SUVs. LCV and SUV demand expected to rise due to rural economy and e-commerce expansion. * Gold Loan: Anticipates more business moving from informal to formal sectors due to liberalized RBI guidelines for small-ticket loans. * NIM Guidance: Confident of improving NIM to 8.5% by Q4 FY26 due to lower incremental borrowing costs and reduced deposit rates. * Credit Cost Guidance: Expected to remain around 2% for the full financial year on total assets. * Passenger Vehicle Growth: Gaining market share in unaddressed semi-urban and rural areas due to lack of public transportation and migration of two-wheeler customers to four-wheelers.
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