Shriram Finance Shares Hit 11-Month Low as Lender Cuts Loan Growth Outlook and Warns of Higher Credit Costs
Mumbai, October 26: Shares of Shriram Finance fell to their lowest level in 11 months on Monday after the non-banking lender trimmed its full-year loan growth target and warned that credit costs would stay elevated for the next few quarters. The caution overshadowed a quarter in which profit rose almost 60%.
Stock under pressure
The stock slipped as much as 7% to ₹810.20 on the BSE in intraday trade, its lowest level since November 2025. That is about 30% below its 52-week high of ₹1,153.65, touched on August 6, 2026. The shares have fallen 10% in two sessions and 18% so far in October. The decline began on Friday’s results: the stock fell 3.98% after the earnings, with investors weighing cautious guidance on growth, margins and credit costs.
Outlook trimmed
Management lowered its FY27 assets under management (AUM) growth guidance from 18% to 15–17%, citing the West Asia crisis and risks to rural cash flows from a below-normal, erratic monsoon.
On credit costs, the company kept its long-term target but flagged near-term pressure. Credit cost on total assets was 2.03% in the quarter, against 1.68% a year earlier and 1.66% in the previous quarter. Executive Vice Chairman Umesh Revankar said the 2% guidance stands, but that credit costs could rise by 30–40 basis points in certain geographies for a short period. Management said credit cost on the loan book was 2.3% and should stay at that level for one or two quarters before normalising.
A strong quarter
The reported numbers were solid. Profit rose nearly 60% to ₹3,677 crore, beating analysts’ estimate of ₹3,546 crore, according to LSEG data. Net interest income rose 38.2% to ₹8,661 crore, and net interest margin widened to 9.52% from 8.19% a year earlier. AUM rose 17% to ₹3.29 trillion. The board also declared an interim dividend of ₹6.50 per share, with October 29 as the record date.
What analysts are saying
Brokerages see the problem as seasonal and regional rather than a broad deterioration. Motilal Oswal said the elevated stress is mainly tied to deficient rainfall in select regions, with no evidence of widespread portfolio deterioration, though it called the asset quality outlook cautious. It described the quarter as mixed, noting that higher slippages and write-offs reflected drought-like conditions across several states.
JM Financial said deteriorating asset quality indicators remain a concern, but pointed to the recent equity infusion and rating upgrades to AAA as cushions for margins. ICICI Securities said the lower growth guidance and higher credit cost are concerns, but that the recent correction in valuation offers upside potential.
Management also noted that gold loans, a growing part of the book, carry no credit cost, since the company can sell the collateral.
Add Business Connect magazine to your Google News feed