SHRIRAMFINNSEQ2 FY'26November 04, 2025

Shriram Finance Limited

6,873words
90turns
11analyst exchanges
5executives
Management on call
Umesh G. Revankar
EXECUTIVE VICE CHAIRMAN, SHRIRAM FINANCE LIMITED
Chakravarti
MANAGING DIRECTOR & CEO, SHRIRAM FINANCE LIMITED
Parag Sharma
MANAGING DIRECTOR & CFO, SHRIRAM FINANCE LIMITED
S. Sunder
JOINT MANAGING DIRECTOR, SHRIRAM FINANCE LIMITED
Sanjay Kumar Mundra
IR (HEAD), SHRIRAM FINANCE LIMITED
Key numbers — 40 extracted
2%
flation has been at an all-time low for a reasonably long time, and it has fallen below the RBI's 2% low tolerance limit. Food prices, which account for nearly half of the basket, dropped to 2.28 ag
2.4%
excess rains, but overall, there is an estimation of increase in Kharif food grain production by 2.4%. It has come down from earlier prediction of 4% because of some damage to the crop, but it is sti
4%
of increase in Kharif food grain production by 2.4%. It has come down from earlier prediction of 4% because of some damage to the crop, but it is still positive for the rural economy. GST collectio
9.1%
e damage to the crop, but it is still positive for the rural economy. GST collection has risen by 9.1% year-on-year. It has been growing steadily, and we expect with the increased GST collection, the
8.27%
uite good for automobiles, especially if you look at the commercial vehicle sales have gone up by 8.27% in Q2. It stands at 2.4 lakh units against 2.21 lakh units in the previous quarter, previous year
2.4 lakh
especially if you look at the commercial vehicle sales have gone up by 8.27% in Q2. It stands at 2.4 lakh units against 2.21 lakh units in the previous quarter, previous year same quarter. And within CV,
2.21 lakh
at the commercial vehicle sales have gone up by 8.27% in Q2. It stands at 2.4 lakh units against 2.21 lakh units in the previous quarter, previous year same quarter. And within CV, M&HCV have recorded a g
9.54%
rter. And within CV, M&HCV have recorded a growth of 6.16, and LCV have grown well with 9.54% which stands at 1.52 lakh units versus 1.3 lakh units. Passenger have de-grown by 1.51%. It stand
1.52 lakh
&HCV have recorded a growth of 6.16, and LCV have grown well with 9.54% which stands at 1.52 lakh units versus 1.3 lakh units. Passenger have de-grown by 1.51%. It stands at 10.39%, but the deman
1.3 lakh
owth of 6.16, and LCV have grown well with 9.54% which stands at 1.52 lakh units versus 1.3 lakh units. Passenger have de-grown by 1.51%. It stands at 10.39%, but the demand in October has bee
1.51%
well with 9.54% which stands at 1.52 lakh units versus 1.3 lakh units. Passenger have de-grown by 1.51%. It stands at 10.39%, but the demand in October has been very good for passenger vehicle across,
10.39%
h stands at 1.52 lakh units versus 1.3 lakh units. Passenger have de-grown by 1.51%. It stands at 10.39%, but the demand in October has been very good for passenger vehicle across, especially for the ba
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Guidance — 20 items
Umesh G. Revankar
opening
“The RBI policy, the key takeaways are the RBI has kept the repo rate unchanged at 5.5, policy stands have remained neutral, the GDP forecast is revised upwards to 6.8 from earlier 6.5, and CPI inflation forecast has lowered to 2.6 down from 3.1.”
Umesh G. Revankar
opening
“It has been growing steadily, and we expect with the increased GST collection, the government infra spend will go up further and that will help the automobile and the construction equipment industry.”
Umesh G. Revankar
opening
“And we expect this quarter, that is the third quarter, passenger vehicle credit growth will be significantly higher.”
Umesh G. Revankar
opening
“But this October, the demand for two-wheeler has been extremely good, and we expect that momentum to continue, and we do expect good growth for the Q3.”
Umesh G. Revankar
opening
“It again speaks volume about the demand coming from the rural segment, and we expect the growth in the rural backed by the government support for the MSP price is likely to be very good.”
Y.S. Chakravarti
opening
“Our disbursements in Q2 FY'26 this year aggregated to 43,019.17 crore versus 39,021.63 crore in Q2 FY25.”
Y.S. Chakravarti
opening
“Our assets under management as of 30th September 2025 registered a growth of 15.74% over Q2 FY25 and of 3.3% sequentially.”
Y.S. Chakravarti
opening
“Our net interest income in Q2 FY'26 registered a growth of 11.77% year-on-year.”
Y.S. Chakravarti
opening
“6,266.84 crores in Q2 FY'26 this year as compared to Rs.”
Y.S. Chakravarti
opening
“Our net interest margin was 8.19% as against 8.74% in Q2 FY'25 and 8.11% in Q1 FY'26.”
Risks & concerns — 9 flagged
If you are growing new vehicles a little more than your back book, should NIMs see some pressure next year or you have more than enough cushion on cost of funds to offset that?
— Chintan
So, during this quarter, multiple finances have said that there is some stress in the CV portfolio.
— Raghav
So, do you think to calibrate disbursement in this portfolio given some sort of stress buildup from last two quarters?
— Renish
We have been cautious with MSME segment, especially the post the tariff, US tariff, because some of the segments are dependent on US market.
— Umesh G. Revankar
So, we do not really see a big challenge there for us.
— Umesh G. Revankar
Are the SRTOs, under cash flow pressure?
— Shubhranshu Mishra
So there has been a decline on a sequential basis.
— Shripal Doshi
We have been cautious because there has been some delay in bill payment in certain geographies.
— Umesh G. Revankar
There is no slowdown to any of the operators, any geography.
— Umesh G. Revankar
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Q&A — 11 exchanges
Q
Hi. Good evening, gentlemen. Can I ask on two aspects, your net interest margin and your growth outlook? On net interest margin, could you give us some guidance on where you think the exit run rate on NIMs would be by the time you reach 4Q? I see that you have used up your excess liquidity but it is not showing up in your NIMs currently. Was that reduction coming in late in September? That would be my first question and then I will ask you on growth as well.
Umesh G. Revankar
Yes, you are right. The reduction has come in the later part of September. So, as we guided in the last quarter, the exit of the fourth quarter, the net interest margin will reach to 8.5. So, on average, it will be anywhere between 8.25 to 8.3 for the full year. Okay. And how should we think about the next year? If you are growing new vehicles a little more than your back book, should NIMs see some pressure next year or you have more than enough cushion on cost of funds to offset that? That will not have any impact on the net interest margin. We will protect our net interest margin to present
Q
Good evening. Thank you and congratulations on a strong performance. Sir, firstly on asset quality, what drove a strong collection performance in early buckets across your main products? Because when I calculate the flow rates into Stage-2, they seem to be much better in Q2 versus Q1. So, can you give us some color about how the income, liquidity and leverage of your customer moved in this quarter, which may have helped you in collecting better?
Umesh G. Revankar
See, our customers are retail customers and they have individual businesses. So, we will not have a full view of their cash flow. But we do understand there is a cash flow mismatches for each of our customers. And by having access to them, reach to them, understanding their business, we do help them in better management of their financial situation. And therefore, our recovery is based on the reach to the customer. And I will not have a total view of their what we call cash flows or their business models. Okay. And, sir, in the light of, you know, reduction in the value of vehicles, now, how d
Q
Sir, hi, good evening, and thank you for the opportunity. Sir, I have 2-3 questions. One, I remember you saying that the transactions in the used CV market have been low. But when I look at your growth rate in the CV portfolio, that has increased from 11% in the 4th Quarter to about 14% now in this quarter. I am just trying to understand, despite you mentioning about low market volumes, how is it that the growth rate has increased? If you can give some color, maybe some bifurcation of value growth and volume growth? That's my first question.
Umesh G. Revankar
See, basically, what has happened is the number of transactions, I said it has come down because naturally what happens is if a person is owning a 10-year-old vehicle, he will upgrade and buy a seven years old vehicle after 3 to 4 years. That's the general practice. But currently, since the prices have gone up significantly in the last two years, people who are having 10 years old vehicle, he's using it for further two or three years, thereby, the number of transaction has come down. But since the value of each of the transaction being higher, for us, we are able to grow the business. And also
Q
Hi, sir. Congrats on a good set of numbers. Just two things, sir. First, on this MSME piece again in this book, GST has gone up and it has been actually increasing from past two quarters. And surprisingly, when we look at historical trend, generally, GST tends to improve in second quarter. But that is not the case in this quarter. So, just wanted to know, what are the emerging trends in this segment? And given this segment has been one of the fastest growing portfolio for us, it has been driving credit growth also. So, do you think to calibrate disbursement in this portfolio given some sort of
Umesh G. Revankar
We have been cautious with MSME segment, especially the post the tariff, US tariff, because some of the segments are dependent on US market. And some of the segments have as high as 60% of their output going into the US market, especially manufacturers and some of the service providers to them. By and large, we are financing service providers, we are not lending to manufacturers. So, we do not really see a big challenge there for us. And our growth was mainly because of wide reach we have created. Earlier, our exposure was mostly in the southern market. But today, post merger, we have large nu
Q
Hi, sir. Good evening. So, two or three questions. The first one is on the strong commercial vehicle, light commercial vehicle. How do we look at the asset quality there? Are the SRTOs, under cash flow pressure? Second is on the passenger vehicle, we've had various OEMs like Maruti and Hyundai talking about 6% to 10% volume growth in FY'27. However, have the OEMs come back to you speaking about price increases from January '26 onwards, because the GST rate cut would have put up prices later. I am talking about the new vehicles here. And again, in terms of new vehicles, how do we look at 50 ton
Umesh G. Revankar
The 50 tonner and more is a little more dependent on government infra spend because most of this vehicle goes for infra-related activity, either for mining or it will go for the large transportation. Right now, the government spend has been little muted. And therefore, the demand is not really big on the large trucks. I did not get the first. Okay. Passenger vehicle, you're saying with the January '26 onwards, there'll be a price increase. And light commercial vehicle asset quality, the cash flows of SRTOs? The cash flow of SRTOs is not impacted at all. It is, I believe, whatever the reading I
Q
Hi, sir. Congrats on a good set of numbers. My question was pertaining to pricing side. So we've already started seeing cost benefit and also liquidity on the balance sheet coming, moderating on a Q&A basis. So on the lending rate side, are we expecting or are we building in any rate cut or passing of rate cut benefit to the end customer, let's say in 3-4 quarters time period?
Umesh G. Revankar
See, we are yet to get the lower cost in a big way. See, if you look at my liability side, 87% is fixed and 13% is floating. So the scope to get a lower rate of return, rate of borrowing comes from only 13%. And the banks are yet to pass on that advantage to us. So we have nothing much to pass on to the customer, but we would definitely love to pass on some cost benefit to the customer depending upon how much we will be able to get out of it. So immediately there's no change, but whatever we can do best to make the customer life and journey better, we will do it. So in that case, when would we
Q
Hi, sir. If you could just, I will just start with the asset quality part only. During the quarter, if you could just guide us, what was the write-offs and what was the same during the last quarter as well?
Parag Sharma
The write-off in the current quarter was Rs. 456 crores as against Rs. 447 crores in the previous quarter. And the provisions was Rs. 877 crores as against Rs. 838 crores in the previous quarter. Okay, sir. And during the quarter, we have seen quite a bit of improvement in the Stage-2 slippages majorly, while stage 3 slippages, if I calculate, has been increased quarter-on-quarter. So if you could just guide what exactly has happened in the Stage-2 bucket versus the stage 3 bucket and how the overall environment was? If you take Stage-2 and 3 put together, over a period of time, it has been mo
Q
Thank you, sir, for the opportunity and congratulations on good set of numbers. So I have a couple of questions. So as far as GST rate simplifications are concerned, would that lead to higher repossession losses for us, at least in the interim period? That is my first question. Second is, so you have partially dealt with the operator economics of SRTOs, but given that there have been regional challenges, so has it impacted load availability for these operators? And also there have been articles surfacing on freight rates going up in India by 2% to 3%. So can you just dwell on these factors as
Umesh G. Revankar
See, construction equipment, it is quite obvious that we have reduced our exposure to construction equipment in the last two quarters. We have been cautious because there has been some delay in bill payment in certain geographies. And therefore, there has been some delay in payment. And we do understand that because the bills have been held at various levels and that I think situation will improve immediately, we expect, we are hoping, because the certain states where the bills are a little slow, bills movement is slow, things have what you call challenges. And you said that the freight rates
Q
Hi, thanks for the opportunity. I just wanted to know if the segmental, if we have the segmental disbursement numbers and the total disbursement number for this quarter?
S.Sunder
It was already announced, but still I will repeat it. The commercial vehicle was Rs. 17,325 crores, passenger vehicles Rs. 8,673 crores, construction equipment Rs. 603 crores, farm equipment Rs. 957 crores, MSME Rs. 6,907 crores, two wheelers Rs. 2,605 crores, personal loans Rs. 2,425 crores, totaling to Rs. 43,019 crores. Okay. Thank you.
Q
Thanks for the opportunity. So I have two questions. So on the subsidiary, so what has been the thought process behind investing in Shriram Overseas Investment Limited? And, if you could just give us some plan that what do you plan to do through the subsidiary? And second one was on public deposits. So that is already making up 28% of your borrowing mix today. So how much further scope do you have to increase this? And maybe after 6-9 months or maybe after a year when you exhaust the limit which are the instruments through which you plan to finance the liability side of the borrowing?
Parag Sharma
Okay, on the subsidiary, we took some board permission to start a primary dealership business. And that is why this subsidiary was created. As of now, we have to get RBI approvals for starting this business. However, the subsidiary is continuing to do government securities trading. But to become a full fledged PD, the license is something which we will await from the regulator. Second question? On the deposit, now we are at 28%. So what is the future of…? Okay, so deposit, in fact, we were actually planning to make it to around 30% of our liabilities. So we are closer to around 28. And we will
Q
Thank you for joining the call. As I was telling in the beginning, the second quarter is a normally a tricky quarter, which we have done quite well. And Q3 and Q4, we should be doing much better because the credit demand has been good and the rural economy seems to be doing very well. The demand across the country for credit has been good and the asset quality has been holding good. And with some improvement in net interest margin, we should expect better numbers coming Q3 and Q4. Thank you very much for joining the call.
Management
Speaking time
Umesh G. Revankar
27
Moderator
13
Parag Sharma
6
Chintan
5
Raghav
5
Renish
5
Shripal Doshi
5
Shubhranshu Mishra
4
Shweta
4
Prithviraj Patil
4
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Opening remarks
Umesh G. Revankar
Thank you. Good evening, friends from India and Asia, and a warm welcome to all of you. Greetings also to those who joined the call from the western part of the world. To present our Q2 FY'26 Earnings Call today, I have with me our Managing Director and CEO – Mr. Chakravarti, Managing Director and CFO – Mr. Parag Sharma; S. Sunder – Joint Managing Director and Sanjay Kumar Mundra – our IR head. It has been a good second quarter of the year for Shriram Finance under current circumstances. Let us look at the broad economic indicators that had a direct impact on our business: GDP, Indian economy recorded a strong start in the first quarter with the real GDP rising to 7.8 against the 6.5 growth in the same period last year. The performance is largely driven by the services sector and while Agri and manufacturing also have contributed positively. On inflation, inflation has been at an all-time low for a reasonably long time, and it has fallen below the RBI's 2% low tolerance limit. Food pri
Y.S. Chakravarti
Thank you, Umesh. Good evening and good morning to people who have woken up now. I welcome all of you to our Q2 FY'26 Earnings Call, and I trust you had the opportunity to peruse them and the related Investor Presentation which has been posted on the website of the Stock Exchanges. We registered a disbursement growth of 10.24% year-on-year. Our disbursements in Q2 FY'26 this year aggregated to 43,019.17 crore versus 39,021.63 crore in Q2 FY25. Our assets under management as of 30th September 2025 registered a growth of 15.74% over Q2 FY25 and of 3.3% sequentially. Our AUM stood at Rs. 2,81,309.46 crores as against Rs. 2,43,042.55 crores a year ago and Rs. 2,72,249.01 crore in Q1 FY'26. Our net interest income in Q2 FY'26 registered a growth of 11.77% year-on-year. We earned a net interest income of Rs. 6,266.84 crores in Q2 FY'26 this year as compared to Rs. 5,606.74 crores in Q2 FY'25. Our net interest margin was 8.19% as against 8.74% in Q2 FY'25 and 8.11% in Q1 FY'26. Our profit aft
Parag Sharma
Thank you. Hello, everyone. I think first and foremost, we were carrying excess liquidity in the previous quarters and we have worked hard to bring down that liquidity. Thereby, the overall debt has come down from Rs. 2,42,911 crores in the June quarter to Rs. 2,34,000 crores in the September quarter. The overall liquidity is now adequate for three months of liability repayment and that is what was the norm which we used to have prior to the December quarter. The incremental cost of fund is also coming down. It is close to around 8.07% for the current quarter and that should give us benefit in the coming quarters. The cost of liabilities have come down from March '25 from 8.95 to 8.83 as of September. June, the number was 8.88. The leverage ratio, because of the overall liabilities being down, has come down from 4.15 to 3.88 and we did not raise large resources in the current quarter and we will look at cheaper borrowing in the coming quarters. The liquidity coverage ratio was at 297%
S. Sunder
Thank you, Parag. Hello, everyone. The employee count as on 30th September 2025 was 78,833 as against 79,186 in the June quarter. There has been a net decrease of 353 employees. The ECL numbers, the Stage-1 PD was 8.85% as on 30th September as against 8.82% on June quarter end and Stage-2 PD was 21.15% as against 21.35% in June quarter and LGD was 39.04% as against 39.05%.
Coming to the disbursement numbers product-wise
The commercial vehicle segment we disbursed was Rs.17,325 crores. Passenger vehicles was Rs.8,673. Construction equipment was Rs. 603 crores. Farm equipment was Rs. 957 crores. MSME Rs. 9,708 crores. Two-wheeler Rs. 2,605 crores. Gold Rs. 3,521 crores. Personal loan Rs. 2,425 crores totalling to Rs. 43,019 crores. This was against June disbursement number of Rs. 41,816. With this, we hand it over to the moderator. We can open the floor for questions. Thank you.
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