- Shriram Finance Limited Q4 FY25 Results: Growth Steady, Focus on Rural India
- How the Economy Affected Shriram Finance Limited
- Vehicle Market Overview
- Financial Highlights of Shriram Finance Limited
- Profitability & Margins
- Asset Quality Remains Healthy
- Performance by Loan Category
- Borrowing & Liquidity
- Operational Trends
- Management View for FY26
- Watch Points and Risks
- Frequently Asked Questions (FAQs)
Shriram Finance Limited Q4 FY25 Results: Growth Steady, Focus on Rural India
Shriram Finance Limited closed the fourth quarter of FY25 with stable growth. The company focused on rural and semi-urban markets, keeping its business strong even with small changes in the economy. Here’s a simple summary of how they performed.
How the Economy Affected Shriram Finance Limited
Key Economic Indicators
- India’s GDP grew by 6.2% in the October to December quarter.
- For the full year, GDP growth is expected to be around 6.5%.
- Inflation stayed low. Consumer Price Index (CPI) was 3.34% and Wholesale Price Index (WPI) was 2.05%.
- The Reserve Bank of India (RBI) cut the repo rate by 0.25% to 6%. The effect of this may be seen in the next few months.
Rural Demand is Strong
- About 85% of Shriram Finance Limited’s branches are in rural or semi-urban areas.
- Farming activity increased, with agriculture GVA up by 3.8% (last year it was only 1.4%).
- Weather conditions are expected to support demand in the coming months with a good monsoon forecast.
Vehicle Market Overview
Shriram Finance Limited is deeply involved in financing vehicles. Here’s how the sector performed:
| Vehicle Segment | Q4 Growth | FY25 Growth |
|---|---|---|
| Passenger Vehicles (PV) | +2.4% | +2.0% |
| Two-Wheelers (2W) | +1.4% | +9.1% |
| Three-Wheelers (3W) | +7.7% | +6.7% |
| Light Commercial Vehicles | – | -2.0% |
| Medium & Heavy CVs | Flat | Flat |
| Tractors/Construction Eqpt | Slight Dip | Slight Dip |
Demand for smaller vehicles grew, especially in rural areas. Bigger trucks and construction equipment saw lower activity.
Financial Highlights of Shriram Finance Limited
Disbursements and Assets
Shriram Finance Limited continued to grow its loan book across all major product lines.
- Total Q4 Disbursements: ₹44,848 crore (up 14.04% YoY)
- Total AUM (Assets Under Management): ₹2,63,190 crore (up 17.05% YoY)
Breakdown of Q4 Loans Disbursed
| Segment | Amount (₹ Cr) |
|---|---|
| Commercial Vehicles | 16,777 |
| Passenger Vehicles | 8,256 |
| Construction Equip. | 2,180 |
| Farm Equipment | 1,060 |
| MSME Loans | 7,660 |
| Two-Wheelers | 2,919 |
| Gold Loans | 3,105 |
| Personal Loans | 2,890 |
Profitability & Margins
- Net Interest Income (NII): ₹6,051 crore (up 13.4% YoY)
- Net Profit (PAT): ₹2,139 crore (up 9.95% YoY)
- Net Interest Margin (NIM): 8.25% (down from 9.02% last year)
- Cost-to-Income Ratio: 27.65%
Though margins reduced slightly due to extra liquidity, profits remained strong.
Asset Quality Remains Healthy
Shriram Finance Limited managed its loans well, keeping bad loans under control.
| Metric | Q4 FY25 | Q4 FY24 |
|---|---|---|
| Gross NPA (Stage-3) | 4.55% | 5.45% |
| Net NPA (Stage-3) | 2.64% | 2.70% |
| Credit Cost | 2.07% | 2.06% |
| Write-Offs | ₹3,162 crore | |
| Provision Reversal | ₹1,603 crore |
Bad loans came down compared to last year. Write-offs were high but mostly one-time events.
Performance by Loan Category
Commercial Vehicles (CV)
- Growth slowed to 10–11% due to market conditions.
- Expecting better growth of 12–15% in FY26.
- Used CV loans continue to do well.
MSME Loans
- Grew by 30% in FY25.
- For FY26, expected to grow 18–20%.
- Most loans are secured, average size is ₹5–6 lakh.
- Interest rates range between 16–24%.
Passenger Vehicles (PV)
- 20% growth this year.
- Some stress in rural areas showed up in risk indicators (Stage-2 assets).
Gold Loans
- Portfolio shrank this year due to people repaying loans early.
- Growth expected to return in FY26.
Personal Loans
- Given only to existing customers to reduce risk.
- Careful approach after earlier growth slowdown.
Two-Wheeler Loans
- Good returns of 16–22% seen on this product.
Borrowing & Liquidity
Shriram Finance Limited kept enough liquidity on hand and borrowed wisely.
- Total Debt: ₹2,34,459 crore (Mar’25), up from ₹1,85,845 crore (Mar’24)
- Securitized Loans: ₹38,000 crore (16% of total)
- Excess Liquidity: ₹31,000 crore (target to reduce to ₹19,000 crore in 6 months)
- Cost of Funds: 8.95%
- Leverage: 4.16x (up from 3.83x last year)
- All foreign borrowings fully hedged
The company managed its cash flows carefully and stayed prepared for future needs.
Operational Trends
- Cost Efficiency: Cost-to-income ratio expected to improve to 27–28% next year.
- Employee Costs: Lower in Q4 due to no festive incentives.
- Fee Income: Rose due to assignment deals.
- Shriram Automall: Strong revenue due to more direct sales.
Management View for FY26
Shriram Finance Limited shared guidance for the year ahead.
- AUM Growth: 15% target
- Credit Cost: Should stay below 2%
- NIM Target: 8.5–8.6%
- Cost-to-Income: Expected to improve further
- No Major Risks: Rural growth offers stability
The company is confident about growth and sees rural India as a solid base.
Watch Points and Risks
Key Concerns
- Stage-2 Loans: Slight increase in MSME and PV loans. Management says it’s under control.
- Liquidity Impact on Margins: Extra liquidity is reducing margins, but this should normalize soon.
- One-Time Write-Offs: Q4 had a large write-off, but it’s not expected to continue.
- Interest Costs: Higher due to bigger loan book and more liquidity.
Shriram Finance Limited ended FY25 on a strong note. Loans grew, profits increased, and the company stayed focused on rural markets. While net margins came down a bit, overall performance was stable. They expect to keep growing next year with controlled risks.
Their focus remains on:
- Growing safely
- Managing risk
- Keeping rural customers at the center
Frequently Asked Questions (FAQs)
1. What does Shriram Finance Limited do?
Shriram Finance Limited offers loans for vehicles, MSMEs, gold, and personal needs, mainly in rural and semi-urban India.
2. Is Shriram Finance Limited growing?
Yes, the company grew its loan book and assets in Q4 FY25, and expects 15% growth in FY26.
3. Are Shriram Finance’s loans risky?
Most loans are secured. The company also writes off non-performing loans and keeps provisions ready.
4. How does Shriram Finance handle rising costs?
They manage costs by improving efficiency and using securitization to raise funds at better rates.
5. What’s the dividend for FY25?
A total dividend of ₹9.9 per share was announced for FY25.
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I’m Rahul Chaudhary, and I write about everything related to the Share Market. From Stock Trends and Share Prices to the Latest News and IPO Updates, my articles aim to provide you with valuable insights to help you navigate the world of investing. Stay tuned for expert tips and updates to keep you informed!
