Informist, Friday, Jul. 25, 2025

By Pratiksha

NEW DELHI – Shriram Finance Ltd. is expected to report a slight year-on-year growth in net profit in the June quarter on the back of stable growth in assets under management. The non-banking finance company's bottom line is expected to rise 8.9% on year to INR 21.57 billion, according to the average of estimates by nine brokerages. Sequentially, the net profit is expected to remain nearly flat.

The estimates for Shriram Finance's net profit for the June quarter range from INR 20.68 billion to INR 22.10 billion. The Chennai-based non-banking finance company had reported a net profit of INR 21.39 billion in the March quarter owing to a rise in assets under management and net interest income.

The company will release its June quarter financial results on Friday.

Centrum Broking Ltd., Kotak Institutional Equities Ltd. and Motilal Oswal Financial Services Ltd. expect Shriram Finance's assets under management to register a growth of 17% on year at the end of the June quarter. The company's assets under management rose 17% on year to INR 2.63 trillion as of Mar. 31. Of the total assets under management, the share of the commercial vehicle, passenger vehicle and micro, small, and medium enterprise segments were 45.1%, 20.6%, and 14.2%, respectively, in the March quarter. Gold loan and personal loan segments made up 1.8% and 3.6%, respectively, of the total assets under management.

Most brokerages expect the lender to report a rise in disbursements in the June quarter, which is expected to support the bottom line growth. Emkay Global Financial Services Ltd. expects Shriram Finance to report a disbursement growth of around 2% on quarter and 21% on year in Apr-Jun. Nirmal Bang Equities Ltd. sees disbursement growing over 2% on quarter and 16% on year. "We expect disbursement growth of ~2% quarter-on-quarter/21% year-on-year, on account of a seasonally weak quarter and slowdown in commercial vehicle sales resulting in assets under management growth of ~2.6% quarter-on-quarter/16% year-on-year," Emkay Global said in its pre-earnings report.

The company's net interest income – the difference between interest earned and expended - for the reporting quarter is expected to have risen 12% on year to INR 58.60 billion, according to the average of estimates from nine brokerages. In Jan-Mar, the company's net interest income rose 13.4% on year to INR 60.51 billion.

Most brokerages expect the company's net interest margin to expand sequentially in Apr-Jun after the Reserve Bank of India's Monetary Policy Committee cut the repo rate by a total of 100 basis points so far in 2025. The increased liquidity in the system and lower rates are expected to support non-banking financial company's net interest margins by reducing the cost of funds.

Kotak Institutional Equities Ltd. expects the company's net interest margin to expand 15 bps on quarter to 8.8%, driven by lower liquidity on balance sheet, while Motilal Oswal Financial Services Ltd. sees it expanding by 10 bps on quarter. Prabhudas Lilladher Ltd. sees the company's net interest margin expanding the most on quarter, by 27 bps. "Factoring a normalising trend in liquidity and a reduction in CoF (cost of fund), we expect NIM (net interest margin) to improve sequentially," it said its pre-earnings report. However, the company's net interest margin is expected to decline on year in the June quarter, as per analysts.

Most brokerages expect the company's credit cost to be largely stable on quarter. Motilal Oswal expects credit cost to remain at 2.4%, while Emkay Global sees it at 2.3%. In a conference call with analysts in April, the company's management had said it will try to bring the credit cost below 2%.

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. Fourteen brokerages have a "buy" rating on Shriram Finance with an average target price of INR 724 per share and four brokerage have a 'hold' rating on the company with an average target price of INR 701. None of the brokerages have a 'sell' rating on the lender.

At 0923 IST, shares of the non-banking financial company were 3% lower at INR 614.80 on the National Stock Exchange. Shares of the company were down nearly 6% since Apr. 25 when it had declared its earnings for the March quarter.

Following are the Apr-Jun earnings estimates for Shriram Finance based on reports from nine broking firms in descending order of net profit estimates:

End

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

Edited by Tanima Banerjee

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