Shriram Finance plunges 8% after missing credit cost est

Shriram Finance shares slid 8.5% to an intraday low of Rs 600 on the BSE on Monday after reporting its Q4 results for FY25, wherein the company reported strong headline numbers, but missed estimates on credit cost and Net Interest Margin (NIM) for Q4FY25.

On the profitability front, the company reported a 10% year-on-year (YoY) rise in standalone net profit to Rs 2,139 crore for the quarter ended March 2025, supported by strong disbursements and healthy net interest income.

However, the credit cost rose sharply by 18% QoQ to 2.4% of Assets Under Management (AUM).

Net interest income (NII) for the quarter grew 13% to Rs 6,051 crore from Rs 5,336 crore in the year-ago period. Total income in Q4 stood at Rs 11,460 crore, up from Rs 9,498 crore a year earlier. Revenue from operations rose 21% YoY to Rs 11,454 crore, while fee and commission income more than doubled to Rs 331 crore.

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Despite rising costs, profit before tax rose to Rs 12,606 crore, partly boosted by a one-time gain of Rs 1,657 crore from the sale of its stake in subsidiary Shriram Housing Finance (now Truhome Finance).

"Our strong performance this year reflects the strength of our lending model and disciplined risk management. We are focused on digital expansion and improving customer experience while maintaining our leadership in rural and semi-urban lending," said Arul Chakravarthi, MD & CEO, Shriram Finance

The company's loan book expanded to Rs 2.45 lakh crore, up from Rs 2.08 lakh crore in FY24. Asset quality remained stable, with gross NPA at 4.55% and net NPA at 2.64%. The capital adequacy ratio stood at 20.66%, well above regulatory requirements.

Nuvama view on Shriram Finance


Nuvama has maintained a 'Buy' rating on Shriram Finance and raised the target price to Rs 760 from Rs 720.

While the company reported strong headline numbers, it missed estimates on credit cost and Net Interest Margin (NIM) for Q4FY25. The miss on NIM was attributed to liquidity remaining high at Rs 300 billion versus the normalised Rs 190 billion. NIM fell by 23 basis points quarter-on-quarter (QoQ) and by 49 basis points over the last two quarters, leading to a flat NII on a sequential basis.

Credit cost also rose sharply by 18% QoQ to 2.4% of Assets Under Management (AUM), while GS2 increased by 18 basis points QoQ. The rise in stress loans and credit cost was driven by a lower-than-expected improvement in asset quality in Q4, typically a strong seasonal quarter, along with the impact of a stress test.

Looking ahead, the management has guided for NIM to improve to 8.5–8.6% in FY26E, along with 15% AUM growth. They do not foresee stress or credit cost rising in FY26E. However, near-term price performance is expected to remain soft.

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