🚀 Shriram Finance Q1 FY25: AUM Surge, Profit Beat & Strategic Clarity Amid Sector Headwinds
Shriram Finance has delivered a resilient Q1 FY25 performance, marked by 16.62% AUM growth, stable asset quality, and a net profit beat. Despite a modest -1.36% stock dip, the company’s fundamentals remain strong, backed by disciplined execution and strategic diversification
đź“Š Performance Snapshot: Q1 FY25 Metrics
| Metric | Q1 FY25 | Previous Period | Change / Commentary |
| Assets Under Management | ₹2.72 Lakh Crore | ₹2.33 Lakh Crore (YoY) | 🔼 +16.62% YoY |
| Gross Stage 3 | 4.53% | 4.55% (Q4 FY24) | đź”˝ Marginal improvement |
| Net Stage 3 | 2.57% | 2.64% (Q4 FY24) | đź”˝ Better provisioning |
| Revenue | ₹11,542 Cr | ₹9,610 Cr (YoY) | 🔼 +20% YoY |
| Net Profit | ₹2,159 Cr | ₹2,031 Cr (YoY) | 🔼 +6.3% YoY, beat est. ₹2,164 Cr |
| Net Interest Income | ₹6,026 Cr | ₹5,354 Cr (YoY) | 🔼 +12.6% YoY |
| Liquidity Coverage Ratio | 268.7% | 225.2% (YoY) | âś… Robust solvency |
đź’¬ Company Commentary: Strategic Focus & Segment Strength
Shriram Finance emphasized that Q1 was driven by prudent credit underwriting, disciplined cost management, and improved customer collections, especially in the commercial vehicle financing segment.
“We’ve seen healthy loan growth across MSMEs, two-wheelers, and passenger vehicles. Our diversification strategy is yielding results, reducing reliance on cyclical segments and strengthening our asset quality,” — Shriram Finance Management
Key strategic moves:
- Acquisition of Shriram Overseas Investments Ltd for ₹50.12 Cr, with plans to divest its Singapore subsidiary within 6–12 months
- ESG-aligned initiatives like EV financing and rural electrification, funded by a $750M social bond
- Cost optimization via NCD buybacks, reducing funding costs by 15–20 bps
🧱 Segment-Wise Growth: MSMEs & 2-Wheelers Lead
Out of the â‚ą2.72 lakh crore AUM:
- Commercial Vehicles: â‚ą1.23 trillion (~45%)
- Passenger Vehicles: â‚ą56,634 Cr (~21%)
- Construction Equipment: â‚ą16,535 Cr (~6%)
- MSMEs & Two-Wheelers: Fastest-growing segments, up 23–35% YoY
This shift reflects Shriram’s pivot toward non-cyclical, high-yield portfolios, enhancing resilience and growth potential.
đź’° Profitability & Margins: Solid Execution
- Net Interest Margin (NIM) expected to rebound to 8.7–8.8% by FY26 as liquidity is redeployed
- Credit costs stable at 2.07%, with GNPA/NNPA improving YoY
- EPS rose to â‚ą11.46 from â‚ą10.54 YoY
Despite missing Street estimates on operating profit, Shriram’s 5-year profit CAGR of 26.7% and 60% post-earnings outperformance rate support a long-term bullish case.
📉 Stock Movement: Short-Term Dip, Long-Term Play?
The -1.36% decline post-results is likely due to:
- Profit booking
- Slight miss on NII and operating profit
- Sector-wide caution amid high funding costs
📌 Investor Insight: Historical backtests show Shriram’s stock averages a +3.17% return over 30 days post-earnings, reinforcing its long-term value proposition.
🧠Bullish Eyes Takeaway
Shriram Finance isn’t just weathering NBFC sector challenges—it’s redefining resilience through strategic diversification, ESG innovation, and disciplined execution.
✅ Why It Matters: For investors with a 3–5 year horizon, this quarter signals a company building for the future—not just surviving the present.