$SHRIRAMFIN

Shriram Finance non-banking financial company's stronger-than-expected performance in the June quarter. While remaining positive on the stock, the brokerage said the progress of the monsoon will be a key factor in determining any revision to the company's growth guidance. Shriram Finance reported a 60% year-on-year increase in net profit for the first quarter of FY27, exceeding the analyst's estimate by 16%. According to the brokerage, the earnings beat was broad-based, with the company delivering better-than-expected performance across all key financial metrics. The analyst highlighted a 97-basis-point quarter-on-quarter expansion in net interest margins (NIMs), driven by a 51-basis-point increase in yields, supported by gains on funds parked from the MUFG Bank transaction. This more than offset a 12-basis-point rise in the cost of funds, which was attributed to excess liquidity. On the business front, the brokerage noted continued strength in the gold loan segment, where financing grew 46% year-on-year in the June quarter, following 37% growth in the previous quarter. However, the MSME portfolio remained under pressure, with assets under management (AUM) increasing only 8% year-on-year during the quarter. The analyst said the management had adopted a cautious approach toward the segment due to global uncertainties last year but believes incremental stress is likely to remain limited and expects the portfolio to recover over time. On asset quality, the brokerage said performance across most vehicle financing segments remained stable. Gross Stage 2 and Stage 3 assets in the commercial vehicle (CV) and passenger vehicle (PV) portfolios increased by only 8–9 basis points quarter-on-quarter during what is typically a seasonally weak quarter, indicating minimal impact from higher fuel prices.