Shriram Finance Ltd

Shriram Finance Limited reported strong financial performance in Q2 FY27, with a 25.71% year-on-year increase in disbursements to INR54,079.02 crores and a 16.96% growth in AUM to INR3,29,021.72 crores. Net interest margin (NIM) rose 38.2% YoY to 9.52%, driven by capital infusion, while profit after tax surged 59.37% to INR3,677.03 crores. Asset quality metrics showed gross Stage 3 at 4.65% and net Stage 3 at 2.31%, with credit cost at 2.03% for the quarter. Management noted temporary increases in Stage 2/3 loans in drought-affected regions but emphasized sufficient provisioning. Guidance for full-year credit cost remained at 2%, with potential temporary spikes of 30-40 bps. NIM is expected to decline gradually to 9% in the medium term and 8.5% long-term. Growth targets were adjusted to 15-17% for FY27 from 18%, citing cautious approach amid weak monsoons and geopolitical factors. MSME lending expanded due to broader geographical reach, while gold financing grew 68% YoY. The company highlighted strong liquidity coverage and plans to maintain cost-income ratio around 25%.

The document highlights strong financial performance, growth in key metrics, and confidence in future performance despite temporary challenges.