26-Oct-2026 08:01:04
CITI on Shriram Fin ; Buy, TP cut to Rs 1100
Q2 in-line, with sharper-than-expected NIM expansion (9.52% vs. 9.04% QoQ)—driven by accretive deployment of excess liquidity—counterbalanced by elevated credit costs (2.3% vs. 1.9% QoQ) While GS3/GS2 held steady at 4.65%/7.04% (vs. 4.64%/6.96% QoQ), improved coverage at 51.5%/7.04% (vs. 51%/6.96%) and higher write-offs drove credit cost higher. AUM growth was robust at 17% YoY/4.9% QoQ, anchored by Gold (+68% YoY), PV (+20% YoY), CV (+19% YoY), and MSME rebound (14% vs. 8% in Q1). With drought conditions in select regions and crude price headwind weighing on outlook, management flagged elevated credit costs for next 2–3 quarters and conservatively guided FY27 AUM growth at 15–17%, despite 9% YTD growth Equity buffer should keep NIMs elevated near-term, before normalizing.
SHRIRAM FINANCE LIMITED