Shriram Finance Limited Q1 FY27 Earnings Conference Call Summary

Management Participants

  • Mr. Umesh Revankar – Executive Vice Chairman
  • Mr. Parag Sharma – Managing Director and Chief Executive Officer
  • Mr. S. Sunder – Joint Managing Director and Chief Financial Officer
  • Mr. Sanjay Kumar Mundra – Executive Director and Head, Investor Relations

Economic Context and Market Overview

Management provided context on macroeconomic conditions affecting business:

  • India's GDP growth was 7.8% in Q4 FY26, with full-year real GDP growth at 7.7%
  • RBI lowered FY27 economic growth forecast to 6.6% due to global conflicts, energy prices, and weather concerns
  • Retail inflation increased to 4.38% in June 2026 from 3.93% in May 2026, driven by higher fuel and food prices
  • Wholesale price inflation reached 9.87% in June 2026, the highest recorded, primarily due to fuel and power price increases
  • RBI maintained repo rate at 5.25% with neutral stance, raised CPI inflation forecast to 5.1% from 4.6%
  • Southwest monsoon forecast reduced to 90% of normal rainfall with 24% deficit between June 4-July 16, 2026
  • GST collections grew 13.9% YoY to ₹1.95 lakh crore in June 2026

Auto Industry Performance Q1 FY27

  • Commercial vehicle sales: 2.65 lakh units, up 14.1% YoY
  • M&HCV: 95,910 units, up 18.3% YoY
  • LCV: 1.69 lakh units, up 20.8% YoY
  • Passenger vehicle sales: 12.74 lakh units, up 25.9% YoY
  • Two-wheeler sales: 56.29 lakh units, up 20.3% YoY
  • Three-wheeler sales: 2.14 lakh units, up 29.7% YoY
  • Tractor sales: 2.65 lakh units, up 21.6% YoY
  • Construction equipment: 25,176 units, up 8.8% YoY
  • EV sales showed significant growth across segments

Financial Performance Q1 FY27

Operational Metrics:

  • Disbursements: ₹49,974.49 crore, up 19.51% YoY (Q1 FY26: ₹41,816.75 crore)
  • Assets Under Management: ₹3,13,798.39 crore, up 15.26% YoY and 3.81% QoQ
  • Q1 FY26: ₹2,72,249.01 crore
  • Q4 FY26: ₹3,02,273.75 crore

Profitability:

  • Net Interest Income: ₹8,055.70 crore, up 33.67% YoY (Q1 FY26: ₹6,026.43 crore)
  • Profit After Tax: ₹3,444.56 crore, up 59.79% YoY (Q1 FY26: ₹2,155.7 crore; Q4 FY26: ₹3,013.57 crore)
  • Net Interest Margin: 9.04% (Q1 FY26: 8.11%; Q4 FY26: 8.61%)
  • Earnings Per Share: ₹14.83 (Q1 FY26: ₹11.46)

Asset Quality:

  • Gross Stage 3: 4.64% (Q1 FY26: 4.53%; Q4 FY26: 4.58%)
  • Net Stage 3: 2.33% (Q1 FY26: 2.57%; Q4 FY26: 2.33%)
  • Credit Cost to Total Assets: 1.66% (Q1 FY26: 1.64%; Q4 FY26: 1.68%)
  • Cost-to-Income Ratio: 25.48% (Q1 FY26: 29.29%; Q4 FY26: 25.32%)

Liability and Capital Structure:

  • Total liabilities decreased from ₹2,50,690 crore (March 2026) to ₹2,32,639 crore
  • Cost of liabilities reduced from 8.59% to 8.56% (3 bps reduction)
  • Incremental borrowing cost: 7.77%
  • Liquidity Coverage Ratio: 262.54% (6 months coverage)
  • Leverage Ratio: 2.14x (March 2026: 3.82x)
  • Capital Adequacy Ratio: 34.1%
  • ₹500 crore of NII contributed from surplus capital of ₹39,600 crore received in April 2026

Segment-wise Disbursements Q1 FY27

  • Commercial Vehicles: ₹19,556 crore
  • Passenger Vehicles: ₹11,018 crore
  • Construction Equipment: ₹792 crore
  • Farm Equipment: ₹947 crore
  • MSME: ₹6,184 crore
  • Two-wheelers: ₹3,548 crore
  • Gold Loans: ₹5,153 crore
  • Personal Loans: ₹2,773 crore
  • Total: ₹49,974 crore

Strategic Business Updates

New Vehicle Financing:

  • Current disbursement mix: 16% new vehicles
  • Targeting increase to 20-25% in medium term
  • New vehicle book expected to reach 30%+ of total portfolio
  • Maintaining long-term NIM guidance of 8.5%

Gold Loan Business:

  • Current portfolio: 2.5% of total book
  • Targeting growth to 5% of book in 3 years
  • 2,200 branches enabled for gold loan operations
  • No asset quality concerns in gold portfolio

MSME Business:

  • Current portfolio: 15% of total book
  • Targeting growth to 20% of book
  • Expanding beyond southern markets to west, north, and east regions
  • Growth expected to accelerate from Q2 FY27

Branch Expansion:

  • Planning to add approximately 150 branches in FY27
  • No significant impact on cost-to-income ratio expected

Guidance and Outlook

Growth Guidance:

  • Maintained full-year FY27 growth guidance of 18%
  • Q2 FY27 growth expected at 15-16%
  • Awaiting Q2 monsoon impact assessment before potential revision
  • Confident of exceeding 15% growth in next quarter

Margin Guidance:

  • Short-term (next 2 quarters): Current NIMs (~9%) expected to hold
  • Medium-term (2-3 years): NIM guidance of 8.5% maintained
  • Benefit from surplus liquidity to gradually subside

Asset Quality Guidance:

  • Credit cost guidance of ~2% maintained for near and medium term
  • No significant asset quality concerns across segments
  • MSME portfolio showing improved confidence after cautious approach

Risk Factors Discussed

  • Monsoon deficit impact on rural income and agricultural output
  • Geopolitical tensions in West Asia affecting fuel prices
  • El Nino strengthening potentially affecting rainfall patterns
  • Uncertainty in construction equipment demand recovery