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Informist, Friday, Jul. 24, 2026

 

--Shriram Finance: See NIM coming down to near 8.5% in 2-3 years

--CONTEXT: Comments by mgmt of Shriram Finance in post-earnings analyst call

--Shriram Finance: Confident of growing MSME loan book to 20% in next few yrs

--Shriram Finance: Didn't borrow funds from bks in Q1, plans to borrow in Q2

--Shriram Finance: Demand for used-vehicle loan good in rural market

--Shriram Finance: Looking for right opportunity to borrow funds

--Shriram Finance: Have plan to add 150 branches in FY27

 

By Vaishali Tyagi and Shweta

 

NEW DELHI – Shriram Finance Ltd. expects its net interest margin to fall marginally to 8.5% in the next two to three years, the management of the non-banking financial company said in an analyst call post its earnings on Friday. The company is passing on lower borrowing costs to customers, helping keep margins stable. Net interest margin is expected to remain supported in the near term due to capital utilisation, but may moderate over the medium term with a higher mix of new vehicle loans, the management said. The company's margin was at 9.04% as on Jun. 30, higher from 8.61% at the end of March quarter. 

 

"Since we are passing on the reduced cost of borrowing to the customers...and over the medium term, definitely it (NIM) will come down a little because our new vehicle mix will go up," the management said. "So, I believe as the new vehicle portfolio keeps increasing, we will be able to manage the NIMS at around 8.5% in the medium term."

 

On the business front, the company's management said the company is confident of growing themicro, small, and medium enterprises loan portfolio. The share of MSME loans is expected to rise to around 20% of the portfolio. On the retail side, the non-banking financial company plans to expand personal loans beyond its existing customer base. The personal loan book is expected to keep growing, with a focus on lending primarily to known customers.

 

For MSME lending, which has traditionally been concentrated in southern markets, the company expects to drive growth across other regions as well, supported by its expanded branch network across the country. "...MSME book also, we are traditionally lending in the southern market," the management said. "Other markets have not really explored much. And since we have now branch network across the country, we will be able to grow our MSME book." As on Jun. 30, the assets under management in MSME segment was at 13.4%, marginally down from 13.6% in the trailing quarter, while personal loans AUM was 3.6% at the end of June quarter, marginally up from 3.5% in the three months ended March. 

 

The company released its earnings during market hours. The non-bank financier reported a net profit of INR 34.45 billion for the June quarter, up 60% on year and over 14% on quarter. Friday, shares of the company closed more than 2% lower from Thursday at INR 1,005.10 on the National Stock Exchange. 

 

The company said that demand for pre-owned vehicles loans from rural markets remains good. Further, the management said there has been no specific push to grow commercial vehicle loans, but the focus on new vehicles will naturally lead to higher growth due to their larger ticket size. The company's AUM rose over 15% on year to INR 3.14 trillion, underpinned by 47% growth in the commercial vehicle segment. Commercial vehicles assets under management were at INR 1.47 trillion as of Jun. 30. 

 

On the fundraising plan, the management said incremental borrowings were limited during Apr-Jun and did not borrow any funds in the quarter under review. Overall liabilities declined as some high-cost funds were paid off, which helped bring down the overall cost of liabilities. "We will be utilising excess liquidity in one-and-a-half months and then look at cash borrowing," the management said. "...when you talk about cash borrowing towards the end of the quarter, it will be in the form of securitisation also. We will look at opportunities."

 

On expansion plans, the company said it plans to add around 150 branches in 2026-27 (Apr-Mar) and increase manpower, "but that will not come at an additional cost...as volume goes up, that additional cost will be absorbed." The company currently has a pan-India presence with a network of 3,225 branches and an employee strength of 78,902, serving 10.3 million customers.  End

 

Edited by Deepshikha Bhardwaj

 

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