More Stories

Informist,  Wednesday, Jul. 22, 2026

 

By Kabir Sharma

 

MUMBAI – Shriram Finance Ltd. is expected to report another set of healthy earnings for the June quarter, supported by sustained loan growth, improving net interest margins, lower funding costs and stable asset quality. While analysts expect some moderation in provisions after elevated levels over the past few quarters, credit costs are likely to remain within the company's guided range.

 

The company is expected to post a net interest income of INR 72.42 billion in the June quarter, up 25.5% year-on-year and 7.3% sequentially, according to the average of estimates from 12 brokerages. Net profit is estimated at INR 30.52 billion, up 41.6% from a year ago and 1.3% over the March quarter, according to the estimates.

 

The estimates, however, show a wide divergence. The highest estimate for net interest income is INR 75.47 billion from JM Financial Institutional Securities and the lowest is INR 68.21 billion from Prabhudas Lilladher. On the profit front, Kotak Securities sees it at INR 33.31 billion and Prabhudas Lilladher expects it at INR 26.60 billion. The non-bank financier will declare its earnings Friday. 

 

The primary driver of earnings is expected to be robust growth in assets under management, especially commercial vehicle loans and used vehicle loans. Most brokerages expect assets under management growth of around 15% year-on-year, with sequential growth of roughly 3.5-4%.

 

The company's diversified lending franchise, spanning commercial vehicles, passenger vehicles, micro, small, and medium enterprises loans and personal loans, is expected to continue supporting disbursement momentum. Motilal Oswal Financial Services estimates quarterly disbursements of nearly INR 498 billion, translating into assets under management of around INR 3.14 trillion, up about 15% from a year earlier and nearly 4% from the preceding quarter.

 

Another important earnings driver is expected to be margin expansion. Falling borrowing costs combined with disciplined pricing are likely to support an improvement in spreads. Several brokerages expect net interest margins to expand sequentially.

 

Kotak Securities expects net interest income as a percentage of assets under management to improve to 9.5% from 9.1% in the March quarter and 8.6% a year ago. Motilal Oswal forecasts margin expansion of around 30 basis points sequentially to 9.4%, while Nomura also expects net interest margin to improve by around 34 bps quarter-on-quarter, aided by a decline in the cost of funds. PhillipCapital expects funding costs to soften sequentially, providing additional support to profitability.

 

The benefit of lower borrowing costs could become increasingly visible over the coming quarters as the company's liabilities are gradually repriced. Analysts believe Shriram Finance is well positioned to benefit from the easing interest rate environment because of its diversified funding profile and strong market access.

 

While revenue growth is expected to remain strong, expenses are likely to stay under control. Kotak Securities expects the cost-to-average assets under management ratio to remain moderate at around 2.6%, broadly within the range reported over the past four quarters. Stable operating expenses, combined with improving margins, should support operating leverage and help sustain earnings growth.

 

Credit costs are also expected to remain manageable despite some brokerages factoring in a marginal sequential increase. Motilal Oswal expects credit costs to rise by around five bps sequentially to 1.95%, while Kotak Securities estimates credit costs at 1.90%, broadly unchanged from recent quarters. Prabhudas Lilladher also expects provision costs to increase modestly on a sequential basis.

 

Analysts broadly expect asset quality to remain stable. Stable collections across vehicle finance portfolios, continued recovery in economic activity and disciplined underwriting are expected to prevent any meaningful deterioration in delinquencies, brokerages said. 

 

The quality of the micro, small, and medium enterprises portfolio will also remain an important area of focus. Following MUFG's strategic investment, investors will closely watch how the company deploys the additional capital. IDBI Capital noted that management has guided for micro, small, and medium enterprises loan growth of 13-15% for 2026-27 (Apr-Mar), reflecting a conservative approach despite the availability of surplus capital.

 

The deployment of fresh capital will be among the key issues investors monitor during the earnings call. Following the capital infusion by MUFG, Shriram Finance's capital adequacy ratio is expected to increase to around 34%, giving the lender significant headroom to pursue growth opportunities across retail lending segments.

 

Analysts will seek management's comments on how quickly the additional capital can be deployed without compromising returns or asset quality. The company's strategy for balancing growth across commercial vehicles, micro, small, and medium enterprises loans and other retail segments will be closely watched. Management's outlook on loan demand will be another key area of focus. Investors will look for commentary on whether commercial vehicle demand remains resilient amid higher fuel prices and whether the monsoon has affected freight movement or rural economic activity. IDBI Capital said rising fuel prices and monsoon-related developments would be key factors to monitor during the quarter.

 

Another key area of interest will be funding costs and liability management. Since several analysts expect borrowing costs to decline further, management's guidance on the pace of transmission of lower interest rates into funding costs will be closely scrutinised. Investors will also look for indications on whether margin expansion can continue over the remainder of 2026-27 (Apr-Mar).

 

All 15 reports on the company available with Informist have a 'buy' recommendation on the stock at an average target price of INR 1,075 per share. This is nearly 2% higher than the current market price. Wednesday, the company's shares closed 0.3% lower at INR 1058.80 on the National Stock Exchange. 

 

The following are the June quarter earnings estimates for Shriram Finance from 12 brokerages in descending order of the estimate of net profit in INR billion:

 

Brokerage	Net interest income	Net profit
Kotak Securities Ltd	73.45	33.31
Motilal Oswal Financial Services Ltd	72.28	32.83
Bank of America global research	72.39	32.19
JM Financial Institutional Securities Pvt Ltd	75.47	30.78
ICICI Securities Ltd	70.55	30.71
IDBI Capital Market Services Ltd	69.58	30.64
Antique Stock Broking Ltd	74.22	30.42
Nirmal Bang Equities Pvt Ltd	73.77	30.20
Nomura Equity Research	72.46	29.74
PhillipCapital (India) Pvt Ltd	72.62	29.60
Elara Securities (India) Pvt Ltd	73.99	29.16
Prabhudas Lilladher Pvt Ltd	68.21	26.60
Average	72.42	30.52

 

End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Himanshi Gupta

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.