Shriram Finance Ltd (SHRIRAMFIN) Q1 FY27 Earnings Call: PAT Surges 60% YoY, Reaffirms 18% AUM Growth Guidance

Shriram Finance Ltd held its Q1 FY27 earnings call on July 24, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Profit and Margin Expansion Mark the Quarter

• Net interest income (NII) of Rs.8,055.70 Cr — up 33.67% YoY in Q1 FY 2026-2027, driven by AUM growth and NIM expansion.
• Profit after tax (PAT) of Rs.3,444.56 Cr — surged 59.79% YoY (vs Rs.2,155.73 Cr in Q1 FY 2025-2026), supported by lower cost-to-income and higher NII.
• AUM reached Rs.3,13,798.39 Cr — up 15.26% YoY and 3.81% sequentially as of June 30, 2026, with full-year FY 2026-2027 growth guidance maintained at 18%.
• Disbursements of Rs.49,974 Cr — grew 19.51% YoY in Q1 FY 2026-2027, led by CV, PV, and MSME segments.
• Cost-to-income ratio improved to 25.48% — versus 29.29% in Q1 FY 2025-2026, reflecting operating leverage gains.
• Capital adequacy ratio (CAR) stood at 34.17% — with leverage ratio falling to 2.14x (from 3.82x in March 2026) following the April 2026 capital infusion of Rs.3,396 Cr.

MSME and Gold Loan Portfolios Targeted for Expansion

• AUM growth guidance of 18% for FY 2026-2027 — management reaffirmed the full-year target, with Q2 FY 2026-2027 expected at ~15-16%, implying stronger H2 demand.
• New vehicle financing now 16% of disbursements — management targets 20-25% "over the coming quarters" and 30%+ of the portfolio in the medium term, as existing customers upgrade.
• MSME book targeted to reach ~20% of total AUM — from the current ~15%, with Q1 FY 2026-2027 disbursements of Rs.6,200 Cr and a target run rate of Rs.7,000 Cr from Q3 FY 2026-2027 onwards.
• Gold loan portfolio at ~2.5% of book, targeting ~5% over three years — leveraging 2,200 branches; management sees shift from pawn brokers to organized NBFCs as a tailwind.
• ~150 new branches planned in FY 2026-2027 — associated manpower costs will be absorbed by volume growth, keeping the cost-to-income ratio stable.
• Q1 FY 2026-2027 disbursement mix — TV Rs.19,556 Cr, PV Rs.11,018 Cr, MSME Rs.6,184 Cr, Gold Rs.5,153 Cr, 2W Rs.3,548 Cr, Personal loans Rs.2,773 Cr, Farm Rs.947 Cr, CE Rs.792 Cr.

NIMs Supported by Surplus Liquidity; Borrowing Costs Declining

• Net interest margin of 9.04% in Q1 FY 2026-2027 — expanded from 8.11% in Q1 FY 2025-2026 and 8.61% in Q4 FY 2025-2026; ~Rs.500 Cr of NII came from surplus liquidity on the Rs.3,396 Cr capital raise.
• Operational NIM (ex-surplus liquidity) guided at ~8.5% — management expects the surplus benefit to gradually subside; medium-term NIM (2-3 years) also anchored at ~8.5%.
• NIM expected to hold at ~9% for Q2-Q3 FY 2026-2027 — before normalizing as surplus liquidity is deployed for growth over the next 1-1.5 months.
• Cost of liabilities declined 3 bps to 8.56% — incremental borrowing cost for FY 2026-2027 is expected at 7.70-7.80%, below the current average, supporting further cost reduction.
• Surplus liquidity of Rs.17,000-18,000 Cr — equal to ~3 months of future repayments, will be deployed for business growth in FY 2026-2027, not for further liability repayment.
• Liquidity coverage ratio (LCR) healthy at 262.54% — covering 6 months of liability repayments.

Stage 3 Edges Higher Seasonally; Credit Cost Guidance Unchanged

• Gross Stage 3 ratio at 4.64% — vs 4.53% YoY and 4.58% sequentially; Net Stage 3 improved to 2.33% (vs 2.57% YoY) in Q1 FY 2026-2027.
• Stage 3 assets up 17% YoY and ~5.5% QoQ — management attributed the increase to seasonal impacts and stated it does not see a significant challenge or a faster cleanup of the books.
• Credit cost of 1.66% in Q1 FY 2026-2027 — compared to 1.64% in Q1 FY 2025-2026; full-year FY 2026-2027 credit cost guidance reiterated at ~2%, with management expecting it to hold into FY 2027-2028.
• Construction equipment portfolio "robust" — management sees no lingering asset quality concerns, despite disbursements running at ~Rs.1,000 Cr (down from a ~Rs.2,000 Cr run rate by FY 2025).
• Gold loan asset quality saw slight deterioration — attributed to a voluntary shift toward one-year interest-servicing loans (changing customer behavior from bullet payments), not new regulations.
• Personal loans limited to known customers — no elevated risk, as disbursements (Rs.2,773 Cr in Q1) are restricted to existing two-wheeler, gold, and MSME clients, with no outsourcing.

CV Growth Aligns with Industry; Construction Equipment Turns Positive

• Commercial vehicle (CV) growth "in line" with industry — Q1 FY 2026-2027 industry CV sales grew ~20% (M&HCV +20.8%, LCV +18.3%), with no extra push or underwriting changes by the company.
• Auto industry Q1 FY27 sales momentum broad — PV +25.9% (to 12.74 lakh units), 2W +20.3% (to 56.29 lakh), 3W +29.7% (to 2.14 lakh), tractors +21.6% (to 2.65 lakh).
• Construction equipment turned positive in Q1 FY 2026-2027 — after four consecutive quarters of negative growth; industry sales +8.8% (to 25,173 units); management expects book growth to resume from Q2 FY 2026-2027.
• MSME disbursements of Rs.6,184 Cr in Q1 — targeting a Rs.7,000 Cr run rate from Q3 FY 2026-2027; expansion rolled out in western India, with northern and central regions being scaled.
• Gold loan portfolio grew well in Q1 — management noted that "gold holdings in India are large" and expects organized NBFCs to gain share from pawn brokers.
• EV segment surge in Q1 FY27 — PV EV +94.8% (to 84,665 units), 2W EV +69.3% (to 5.22 lakh), 3W EV +13.2% (to 2.15 lakh), attributed partly to fuel price uncertainty.

Monsoon Deficit and West Asia Conflict Pose Near-Term Uncertainty

• AUM growth of 18% maintained for FY 2026-2027 — subject to reassessment after Q2 depending on monsoon deficit impact; management cautioned that Q2 is typically tricky due to rainfall dependency.
• RBI lowered FY 2026-2027 GDP growth forecast to 6.6% — from 6.9%, and raised CPI inflation forecast to 5.1% (from 4.6%); repo rate held at 5.25% with neutral stance, as cited by management.
• IMD lowered the 2026 southwest monsoon forecast to 90% of normal — management cited the forecast noting "seasonal rainfall was 24% below normal between June 4 – July 16, FY27," with strengthening El Nino and potential impact on rural income.
• West Asia crisis adds uncertainty — management noted the Iran war as an external risk but stated that "the impact on petroleum-dependent industries has passed" with one-time cost increases absorbed and passed to customers.
• No near-term impact from E20 fuel on used vehicle demand — management stated "OEMs have stated their cars are capable of running on E20" and that Shriram Finance does not normally finance cars more than seven years old.
• Management expects similar disbursement growth in FY 2026-2027 as Q1 — despite external risks, with confidence that the company will "perform well and deliver good results" for the remainder of the fiscal year.