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Informist, Wednesday, Jan. 21, 2026

 

By Shubham Rana

 

NEW DELHI – Shriram Finance Ltd. is expected to report a double-digit rise in its net profit for the December quarter led by a healthy growth in assets under management, according to brokerages tracking the non-banking financial company. The company's margins are also expected to improve on the back of the 25-basis-points cut in the Reserve Bank of India's key repo rate and credit rating upgrades in December, analysts tracking the company said.

 

The Chennai-based lender's net profit for the December quarter is seen at INR 25.00 billion, according to the average of estimates from nine brokerages, up 20% from INR 20.80 billion a year ago. The company had reported a net profit of INR 35.70 billion for the year-ago quarter, which included a one-time gain of INR 14.89 billion. Excluding the one-time gain, the net profit was INR 20.80 billion.

 

Sequentially, the net profit for the reporting quarter is expected to rise 8.4%. The company had reported a net profit of INR 23.07 billion for the September quarter, up 11% on year, on the back of healthy growth in assets under management and net interest income.

 

Kotak Securities Ltd. has the lowest estimate for the company's net profit for the December quarter at INR 23.77 billion while Prabhudas Lilladher Pvt. Ltd. has the highest estimate at INR 26.44 billion. The company will detail its December quarter earnings Friday.

 

Brokerages see the company's assets under management rising 15-17% on year to about INR 2.94 trillion to INR 2.98 trillion at December end. This rise would be on top of the 16% on-year increase to INR 2.81 trillion at the end of September.

 

"We expect disbursement growth of 10% YoY (year-on-year) led by strong disbursement across the vehicle and non-vehicle segments like gold and mortgage, resulting in AUM (assets under management) growth of (around) 6% QoQ (quarter-on-quarter)/17% YoY," Emkay Global Financial Services Ltd. said in a pre-earnings report.

 

Kotak Securities sees a quarter-on-quarter loan growth of 4% in the reporting quarter, in line with the 3.3-4.7% rise seen in the previous four quarters. Brokerage Prabhudas Lilladher said it expects strong loan growth in the passenger vehicle segment due to the cut in the Goods and Services Tax which should lead to a 17% on-year growth in assets under management in the December quarter.

 

Of the total assets under management, the commercial vehicle segment had the largest share at 45.6% as of Sept. 30, followed by passenger vehicle segment at 21.2%, and the micro, small, and medium enterprises segment at 14.4%.

 

The company's net interest income -- the difference between interest earned and expended -- for the December quarter is expected to have risen 14% on year to INR 66.51 billion, according to the average of estimates from nine brokerages. The company's net interest income had risen 12% on year to INR 62.67 billion in the September quarter.

 

Most brokerages expect the company's net interest margin to expand 20-40 basis points on quarter in the December quarter owing to a reduction in cost of funds after the 125-bps rate cuts by the RBI's Monetary Policy Committee in 2025. The company's net interest margin was 8.19% in the September quarter. The recent spate of credit rating upgrades for the company is expected to support a rise in margins by way of lower cost of borrowing, brokerages said.

 

In December, Shriram Finance announced that Japan's MUFG Bank will invest over INR 396 billion in the company for a 20% stake. S&P Global Ratings on Jan. 15 raised its long-term credit rating on Shriram Finance to 'BBB-' from 'BB+' with a 'stable' outlook, citing the capital infusion by MUFG Bank. The rating agency said the fund infusion will likely strengthen Shriram Finance's capitalisation, lower borrowing costs, and increase margins.

 

Brokerages will watch out for the company's commentary on loan growth in the commercial vehicle segment and asset quality in the two-wheeler and passenger vehicle segments.

 

Shares of the company have risen over 30% since it declared earnings for the September quarter on Oct. 31. Shares of the company Wednesday closed 0.2% lower at INR 986 on the National Stock Exchange. All 12 brokerages, whose reports on Shriram Finance are available with Informist, have a 'buy' rating on the company with an average target price of INR 1,023.

 

The following are the Oct-Dec earnings estimates for Shriram Finance from nine brokerages in descending order of the estimate of net profit in INR billion:

 

BROKERAGE	NET INTEREST INCOME	NET PROFIT
Prabhudas Lilladher Pvt. Ltd.	67.64	26.44
Motilal Oswal Financial Services Ltd.	65.35	25.68
Nirmal Bang Equities Pvt. Ltd.	67.11	25.44
Elara Securities (India) Pvt. Ltd.	66.46	24.93
Emkay Global Financial Services Ltd.	68.89	24.89
ICICI Securities Ltd.	63.91	24.79
YES Securities (India) Ltd.	68.58	24.64
Nuvama Wealth Management Ltd.	66.80	24.40
Kotak Securities Ltd.	63.84	23.77
Average	66.51	25.00

 

End

 

Edited by Ashish Shirke

 

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