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Informist, Thursday, Oct. 23, 2025

By Pratiksha

NEW DELHI – Shriram Finance Ltd's net profit is seen rising only slightly on year for the September quarter despite healthy growth in assets under management, according to brokerages tracking the non-banking finance company. High credit cost is likely to eat into the company's bottom line, analysts said. 

The Chennai-based lender's net profit is expected to rise 7% on year to INR 22.19 billion in the reporting quarter, according to an average of estimates from 10 brokerages. Sequentially, the net profit is expected to rise 3%. YES Securities Ltd. has the lowest estimate for the company's net profit for the September quarter at INR 21.02 billion while Elara Securities Ltd. has the highest at INR 22.97 billion. The company will detail its September quarter earnings on Oct. 31.

ICICI Securities Ltd., JM Financial Securities Ltd., and Kotak Securities Ltd. expect Shriram Finance's assets under management to grow 16% on year at the end of the September quarter, and Emkay Global Financial Services Ltd. expects the AUM to grow 17%. This is on top of a 16.6% on-year growth to INR 2.72 trillion in the previous quarter.

"We expect disbursement growth of 12% year-on-year, led by strong disbursement in non-vehicle segments like gold and mortgage offsetting the impact of slowdown in commercial vehicle sales, resulting in AUM growth of ~4.5% quarter-on-quarter/17% year-on-year," Emkay Global said. Of the total assets under management, the share of the commercial vehicle segment was 45.2%, that of the passenger vehicle segment was 20.8%, and the share of the micro, small, and medium enterprise segment was 14.3% at the end of the June quarter.

The company's net interest income – the difference between interest earned and expended - for the reporting quarter is expected to have risen 12.8% on year to INR 61.61 billion, according to the average of estimates from 10 brokerages. The company's net interest income had risen 13% on year to INR 60.26 billion in the previous quarter.

Most brokerages expect high credit cost to be a pain point for the lender. In the June quarter, credit cost of the company was 1.64%, down from 1.87% a year ago. Both Emkay Global and ICICI Securities expect the credit cost to rise 7 basis points on quarter while JM Financial and brokerage Motilal Oswal see credit cost rising 25 bps on quarter.

Most brokerage firms expect the company's net interest margin to expand sequentially in the September quarter owing to reduction in cost of funds after a 100-bps rate cut by the Reserve Bank of India's Monetary Policy Committee so far in 2025. The company's net interest margin was at 8.11% in the June quarter. The lower rates are expected to support the non-banking financial company's net interest margins by reducing the cost of funds.

Brokerage Prabhudas Lilladher and JM Financial expect the net interest margin to expand 10 bps on quarter while Nirmal Bang sees it rise 14 bps on quarter. "Factoring a normalising trend in liquidity and a reduction in cost of funds, we expect NIM to improve. Remain wary on credit cost (2.1% in Q2 FY26 estimated)," brokerage Prabhudas Lilladher said. The lender is confident of achieving a net interest margin of 8.5% by the end of FY26. 

Analysts will watch out for Shriram Finance's commentary on growth in assets under management, change in portfolio mix, and guidance on asset quality and credit cost. Shares of the company have risen over 12% since it declared earnings for the June quarter on Jul. 25. Thursday, shares of the company ended 2.1% higher at INR 709.65 on the National Stock Exchange. 

Of the 19 brokerage reports on the company available with Informist, 15 have a 'buy' rating with an average target price of INR 721 per share and four brokerages have a 'sell' rating on the lender with an average target price of INR 689.

The company had posted a net profit of INR 21.56 billion for the June quarter, up almost 9% on year, on the back of healthy growth in assets under management and increase in net interest income. 

The following are the Jul-Sept earnings estimates for Shriram Finance from 10 brokerages in descending order of the estimate of net profit in INR million:

End

Edited by Vandana Hingorani

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