SHRIRAMFIN

Shriram Finance’s (Shriram) Q1FY26 core operating performance remained strong with NII growth at 4% QoQ/10% YoY and a sequential easing in credit cost to 1.9% vs. 2.4% QoQ. However, lower other income, at INR 3.6bn (down 45% QoQ) vs. INR6.6bn QoQ, restrained PAT at INR 21.6bn, up only 1% QoQ, during Q1FY26. While headline asset quality is healthier, evidenced by a modest shrinking in the GNPL ratio to 4.53% vs. 4.55% QoQ, burgeoning Stage-2 assets in CV (45% of AUM), PV (21%) and CE (6%) casts a shadow on credit cost’s trajectory – even in the context of write-offs (cal.) having sequentially retreated to ~20bps vs. >100bps QoQ. Even so, management is confident about maintaining credit cost below 2% in FY26 while highlighting that it does not foresee any risk in the MSME portfolio at this juncture.