Shriram Finance slips 9% post Q4 earnings. Should you buy, sell or hold?

The company's reported net interest margin (NIM) dipped ~23bp quarter-on-quarter to 8.25 per cent in March 2025 quarter, primarily because of excess liquidity on the balance sheet.

Shriram Finance share price today: Shares of Shriram Finance slipped 9 per cent to ₹596.15 on the National Stock Exchange (NSE) in Monday’s intra-day trade after the company’s reported net interest margin (NIM) dipped ~23bp quarter-on-quarter (QoQ) to 8.25 per cent in March 2025 (Q4FY25), primarily because of excess liquidity on the balance sheet. 

 

In the past three trading days, the stock price of the non-banking finance company (NBFC) has dipped 15 per cent. At 9:59 AM, Shriram Finance, the top loser among Nifty 50 stocks, was down 8 per cent. In comparison, the Nifty 50 index was up 0.6 per cent at 24,181. The average trading volumes on the counter jumped multi-fold, with a combined 9.9 million shares changing hands on the NSE and BSE.  Read Stock Market LIVE Updates Today Here

 

 

Q4 financial performance

 

Shriram Finance reported a standalone net profit at ₹2,139 crore for Q4FY25, up 10 per cent year-on-year (YoY), against ₹194.59 crore in Q4FY24. The company's net interest income (NII), the difference between interest earned on loans given out and paid on funds borrowed, grew 13.4 per cent YoY at ₹605.11 crore.

 

The company’s reported NIM dipped 77bp YoY to 8.25 per cent in Q4FY25 from 9.02 per cent in Q4FY24. Its assets under management rose 17 per cent to ₹2.63 trillion in the fourth quarter, its slowest rise since the March 2023 quarter.

 

Shriram Finance undertook technical write-offs of ~₹ 2,350 crore in Q4FY25, which was Profit & Loss neutral but led to an improvement of ~85bp in GS3 to 4.55 per cent. Excluding technical write-offs, GS3 rose ~3bp QoQ. Gross Stage 2 (GS2) rose ~20bp QoQ. 

 

“Gross Stage 3 in Q4FY25 stood at 4.55 per cent as against 5.38 per cent in Q3FY25. The reduction in GNPA is primarily on account of technical write off of ₹2,345 crore of assets which were provided for commercial vehicles (CV), passenger vehicles, MSME, construction equipment and other segments” Shriram Finance said.

 

Highlights from the management commentary

 

The company's management shared that it does not anticipate any further increase in stress or credit costs in the upcoming fiscal year. Additionally, management remains confident that there will be no significant forward flows from the GS2 pool in Q1FY26.

 

Between 2019 and 2021, CV sales were subdued, resulting in a limited supply of used vehicles in the market. With CV sales picking up from FY22 onwards, the availability of used vehicles and the volume of used vehicle transactions are expected to increase from FY27.  ALSO READ | RIL shares soar 3% after Q4 results; check earnings, analyst reviews here

 

Certain rural segments in central parts of India (Chhattisgarh, MP, and some parts of Bihar), alongside their border areas, had some collection impact because of the slowdown in the economy. The situation has improved now, and the company does not see any scope for further deterioration in asset quality. 

 

Brokerage views - Motilal Oswal Financial Services

 

Shriram Finance delivered a decent operational performance during the quarter, supported by healthy growth in AUM and disbursements. Although credit costs in the quarter were higher than guidance, the company does not foresee any further stress or deterioration in asset quality in FY26. Moreover, it anticipates an improvement in the overall credit environment, which is expected to sustain healthy AUM growth. NIMs are expected to revert to previous levels and further expand as excess liquidity on the balance sheet normalises.

 

The company is effectively leveraging cross-selling opportunities to reach new customers and introduce new products, which will lead to improved operating metrics and a solid foundation for sustainable growth.

 

The current valuation of ~1.7x FY27E P/BV is attractive for ~19 per cent PAT compound annual growth rate (CAGR) over FY25-27E and RoA/RoE of ~3.3 per cent/16.0 per cent in FY27E. Reiterate 'Buy' with a target price of ₹790 (based on 2x FY27E BVPS). 

Brokerage views – ICICI Securities

 

Shriram Finance reported steady performance in Q4FY25, with a moderation in AUM and elevated write-off, though operational performance remained broadly steady. Guidance on growth at 15 per cent, improvement in margins as liquidity is utilised in next two quarters and steady credit cost is expected to enable healthy performance ahead.  

ALSO READ | Can RIL stock hit ₹ 2,000-mark post Q4 results in 12 months? Trading view

About Shriram Finance

 

Shriram Finance is the flagship company of the Shriram group which has significant presence in Consumer Finance, Life Insurance, General Insurance, Stock Broking and Distribution businesses. Shriram Finance Limited is one of India’s largest retail assets financing Non-Banking Finance Companies (NBFC) with Assets under Management (AUM) above ₹2.63 trillion. 

 

Established in 1979, Shriram Finance is a holistic finance provider catering to the needs of Small Road Transport Operators and small business owners and is a leader in organised financing of pre-owned commercial vehicles and two wheelers. It has vertically integrated business model and offers financing number of products which include passenger commercial vehicles, loans to micro and small and medium enterprises (MSMEs), tractors & farm equipment, gold, personal loans and working capital loans, etc.