Shriram Finance sees assets under management growth slowing to 15% in FY25

Indian non-banking finance company Shriram Finance expects its assets under management (AUM) to grow at 15% in fiscal 2025 from around 20% expected in the current year ending March 31, its executive vice chairman said on Monday.

"For this year, we may end up at an AUM growth of around 20% because the first three quarters have been good," Umesh Revankar said in an interview with Reuters.

"For next year, we are a little cautious because we have elections in the first quarter. Some of the economic activities will be diverted and therefore we can see some slowdown there."

Shriram Finance is one of India's largest non-banking finance companies, formed by the merger of Shriram Capital, Shriram City Union Finance and Shriram Transport Finance in November 2022.

Its AUM grew 20.7% on year to 2.14 trillion rupees as of end-December, while clocking 2.03 trillion as of end-September.

The company expects to maintain margins in the 8.9%-9% range for the current quarter, largely due to a favourable loan portfolio, Revankar said.

It reported a net interest margin (NIM) of 8.99% in the December quarter, up from 8.52% a year earlier.

"The merger synergies are playing out well and we are able to increase contribution from MSME (medium and small enterprises), gold and passenger vehicles to our portfolio, which is giving us a higher yield," he said.

Shriram Finance could look to issue dollar bonds in the next financial year depending on market conditions given the "good" response from investors for its $750-million bond issue placed earlier this month, he said.

The Reserve Bank of India's mandate for lenders to set aside more capital for personal loans and credit cards has not had a significant impact on Shriram Finance's books given that the NBFC lends only to existing customers and has not taken on any new-to-credit customers, Revankar said.

Going forward, Revankar said, the NBFC aims to keep its share of the personal loan portfolio under 5% of its total AUM. The share stood at 4.45% in the fiscal third quarter.

Separately, Shriram Finance is still "looking at various options" to provide growth capital into its housing finance arm Shriram Housing Finance, Revankar said.