Shriram Finance wrote-off Gross NPA worth ₹2,345.11 crore during the March quarter.
Brokerages have maintained their bullish stance on the stock, but have cut their earnings estimates, warning of risks to the company’s Net Interest Margins and Returns on Assets (RoA)
Macquarie has an “outperform” rating on Shriram Finance with a price target of ₹800 per share. The stock ended Friday’s session at ₹640 apiece.
CLSA too has an “outperform” rating on the stock with a price target of ₹670 apiece. Morgan Stanley has an “overweight” rating on the stock with a target of ₹750 per share.
Kotak Institutional Equities, HSBC and Citi have “buy” ratings on the stock. Kotak and Citi both have a price target of ₹750 apiece, while HSBC has a price target of ₹740 per share.
Macquarie
Macquarie said Shriram Finance’s profit after tax missed estimates. Lower net interest margin (NIM) and higher credit costs were partially offset by lower taxes, it said.
Macquarie said the lender’s higher liquidity continues to drag its Net Interest Margin (NIM) and the guidance for FY26 implies a downside risk to the NIMs and return on assets (ROA).
It said the company’s management continues to guide for the FY26 NIM of 8.4%, compared to 8.55% in FY25, given a drag down of excess liquidity and some pass-through of benefit to customers. This results in further downside risks to NIMs and RoAs.
CLSA
CLSA has said Shriram Finance’s fourth quarter net interest income (NII) was behind estimates by 5%, primarily due to lower NIMs, driven by higher liquidity on the balance sheet. Also, credit costs were elevated as the company wrote off 5.3% of the Gross NPAs, that were provided for in totality.
The company’s net slippages rose for another quarter and the management indicated stress in a few pockets, it said.
On the positive side, Shriram Finance’s fee income was strong and opex was a beat.
CLSA said there was some slowdown in loan growth, which was in-line with what it witnessed for all banks and NBFCs.
Nevertheless, Shriram Finance guides for 15% loan growth next year with largely stable asset quality and some improvement in NIMs, CLSA said.
Morgan Stanley
Morgan Stanley said Shriram Finance’s credit costs of 2.42% were higher than its estimates of 2.1%.
It assessed that net stage 2+3 slippages rose, but that did not account for entire rise in credit costs.
Shriram Finance wrote off ₹2,340 crore, fully provided NPLs during the fourth quarter. Morgan Stanley said stage 3 slippage rate during the quarter is similar to Morgan Stanley’s estimates for financial year 2026. The stage 2 rise in the first half of FY25 looks sharp, but its up 12 bps from the previous year, owing to a fall in in the first half.
Kotak Institutional Equities, HSBC and Citi
Kotak Institutional Equities said Shriram Finance reported a marginal rise in delinquencies across segments, raising the market’s anxieties. It said the trends are definitely monitorable, though not alarming. While growth remains calibrating, liability-side tailwinds provide a buffer to earnings, it said.
HSBC said the NIM pressure, increase in credit costs and a sharp increase in gross stage 2 loans in the fourth quarter were expected.
Earnings may be under pressure in the near term, but on a two-year CAGR basis, Shriram Finance’s earnings growth and profitability are healthy, HSBC said. Despite this, it has cut its earnings per share (EPS) estimates for Shriram Finance by 4%-6% for FY26-27.
Citi said Shriram Finance’s quarterly earnings missed estimates primarily due to 23 bps further sequential decline in NIMs (₹31,000 crore excess liquidity drag) and credit cost/assets under management at 2.42% from 2.13% in the previous quarter. The same is attributed to rural stress in Central India.
Post the write-offs, the provision coverage dragged to 43% and the management expects to maintain a similar range, Citi said.
Of the 40 analysts that have coverage on the stock, 37 have a “buy” rating, two have a “hold” rating and one has a “sell” rating.
Shriram Finance shares ended the previous session 8% lower. The stock has gained 9.6% this year, so far.
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