This article first appeared on GuruFocus .
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Disbursement Growth:14.17% Y-o-Y, totaling INR48,645 crores in Q3 FY26 versus INR42,606 crores in Q3 FY25.
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Asset Under Management (AUM):Grew 14.63% Y-o-Y to INR2,91,709.03 crores as of December 31, 2025.
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Net Interest Income:Increased by 16.17% Y-o-Y to INR6,764.09 crores in Q3 FY26.
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Net Interest Margin:8.58% in Q3 FY26, up from 8.48% in Q3 FY25.
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Profit After Tax (PAT):Grew 21.21% Y-o-Y to INR2,521.67 crores in Q3 FY26, excluding a onetime gain.
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Earnings Per Share (EPS):INR13.40 in Q3 FY26, compared to INR11.07 in Q3 FY25.
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Gross Stage 3 Assets:4.54% in Q3 FY26, improved from 5.38% in Q3 FY25.
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Net Stage 3 Assets:2.38% in Q3 FY26, down from 2.68% in Q3 FY25.
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Credit Cost:1.62% in Q3 FY26, compared to 1.85% in Q3 FY25.
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Cost-to-Income Ratio:29.66% in Q3 FY26, up from 28.59% in Q3 FY25.
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Total Liabilities:INR2,51,732 crores as of December 31, 2025.
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Cost of Liabilities:Reduced by 14 basis points to 8.69%.
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Liquidity Coverage Ratio:Approximately 335%, above statutory requirements.
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Leverage Ratio:4.05, up from 3.88 in the previous quarter.
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Warning! GuruFocus has detected 8 Warning Signs with BOM:511218.
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Release Date: January 23, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Shriram Finance Ltd ( BOM:511218 ) reported a strong disbursement growth of 14.17% year-over-year, reaching INR48,645 crores in Q3 FY26.
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The company's asset under management (AUM) grew by 14.63% over the previous year, standing at INR2,91,709.03 crores.
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Net interest income increased by 16.17% year-over-year, with a net interest margin improvement to 8.58% in Q3 FY26.
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Profit after tax grew by 21.21% compared to Q3 FY25, excluding a one-time gain from the sale of a stake in a subsidiary.
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The company received rating upgrades from CARE and positive outlooks from CRISIL and ICRA, with S&P upgrading its rating to BBB-.
Negative Points
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The cost-to-income ratio increased to 29.66% in Q3 FY26 from 28.59% in Q3 FY25, partly due to increased gratuity and long-term compensation expenses.
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The construction equipment segment experienced a decline, with sales decreasing by 14% compared to the previous year.
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There is a cautious outlook on heavy commercial vehicle growth due to reduced infrastructure spending.
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Employee expenses increased significantly, partly due to incentive schemes, despite a reduction in employee count.
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The MSME segment showed a deceleration in growth pace, with concerns about potential impacts from US tariffs.
Q & A Highlights
Q: How will the recent equity raise impact Shriram Finance's cash flow and borrowing strategy? A: Umesh Revankar, Executive Vice Chairman, explained that the equity infusion of around INR40,000 crores will be quickly utilized, as their quarterly disbursement is between INR45,000 to INR50,000 crores. The company aims to retain customers who might otherwise move to banks by offering competitive rates, leveraging their improved credit profile.
Q: What is Shriram Finance's strategy for managing customer retention and pricing? A: Umesh Revankar stated that they use internal customer ratings to determine pricing, rather than relying solely on public credit scores. This allows them to offer competitive rates to retain customers with good track records, even if these rates are slightly higher than those offered by banks.
Q: How does Shriram Finance plan to sustain net interest margins while managing funding costs and credit risk? A: S. Sunder, Joint Managing Director, mentioned that with the partnership of MUFG and improved credit ratings, they expect borrowing costs to decrease by around 100 basis points over two years. They plan to maintain or slightly improve net interest margins by passing some benefits to customers and improving credit quality.
Q: What is the outlook for the commercial vehicle (CV) segment, particularly in terms of business momentum and asset quality? A: Umesh Revankar noted that there is strong demand for light commercial vehicles (LCVs) and small commercial vehicles (SCVs) due to increased rural consumption and e-commerce penetration into smaller towns. However, heavy commercial vehicle (HCV) growth is dependent on infrastructure spending, which has slowed recently.
Q: How is Shriram Finance addressing potential asset quality concerns in segments like MSME and construction equipment? A: Umesh Revankar acknowledged temporary increases in Stage 3 assets but expressed confidence in their customers' ability to adapt to market changes. They are not seeing significant stress in any portfolio and expect improvements as market conditions stabilize.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
