Shriram Finance Ltd delivered a strong performance in the June quarter, with standalone net profit rising nearly 60% year-on-year, supported by higher net interest income (NII), expanding margins, and improving asset quality.

The company reported a net profit of ₹3,445 crore, up from ₹2,156 crore a year ago. On a sequential basis, profit also grew 14.3% from ₹3,014 crore in the March quarter.

Strong NII growth and margin expansion

Net interest income (NII) rose 33.7% year-on-year to ₹8,056 crore, compared with ₹6,026 crore last year. Sequentially, NII increased 16.8% from ₹6,899 crore.

A key highlight was the improvement in net interest margin (NIM):

  • 9.04% in Q1
  • Up from 8.11% a year ago
  • Higher than 8.61% in the previous quarter

The margin expansion reflects better pricing power, improved yields, and efficient cost of funds management.

Operating performance remains strong

Operating profit climbed 45.2% year-on-year to ₹6,085 crore, compared with ₹4,192 crore in the same period last year. It also rose 14.3% sequentially, indicating consistent business momentum.

Asset quality shows improvement

The company reported stable-to-improving asset quality metrics:

  • Gross Stage 3 assets: 4.64% (vs 4.53% YoY, 4.58% QoQ)
  • Net Stage 3 assets: 2.33% (improved from 2.57% YoY, flat QoQ)

While gross NPAs inched up slightly, the decline in net Stage 3 assets indicates better recoveries and provisioning strength.

Capital raising plans to support growth

Shriram Finance’s board approved a resource mobilisation plan to raise funds between August 1 and October 31 through:

  • Non-convertible debentures (NCDs)
  • Subordinated debentures
  • Bonds and notes
  • Other borrowing instruments

These may be issued in one or multiple tranches across domestic and international markets to support future lending growth.

Strategic funding and capital deployment

The company also utilised ₹37,451 crore from funds raised via preferential allotment to Mitsubishi UFJ Financial Group (MUFG) during the quarter.

The remaining ₹2,167 crore was temporarily parked in liquid mutual funds, reflecting prudent treasury management.

Outlook

With:

  • Strong loan growth momentum
  • Expanding margins
  • Improving asset quality
  • Access to diversified funding sources

Shriram Finance appears well-positioned to sustain growth in the coming quarters.

However, key monitorables will include:

  • Asset quality trends amid macro uncertainties
  • Cost of funds trajectory
  • Credit demand across segments