Shriram Finance (SHFL IN) – Q3FY26 Result Update – Strong growth outlook; asset quality resilient – BUY
Published on 25 Jan 2026
Q3FY26 AUM grew 14.6% YoY to Rs 2,917.1bn, led by strong growth in the CV, PV and MSME portfolios. Commentary indicates a strong uptick in Small CV, LCV and PV post GST rationalization. We build in a CAGR of ~18% in AUM over FY25-28E led by higher volumes in VF and a strong ramp-up in the non-VF portfolio (MSME and Gold loans). NIM improved to 8.6% supported by a reduction in CoF; we expect NIM to improve by ~20bps in FY27E. Asset quality ratios were largely stable QoQ, with a broad improvement in Stage 2 across categories. We expect credit cost to improve by ~20bps by FY28E as SHFL expands to new CV. We slightly tweak our FY27/ FY28E estimates on favorable margin profile and controlled asset quality trend, resulting in RoA of 3.4% by FY28E. Maintain ‘BUY’ with a multiple of 2.3x on Dec’27 ABV and a TP of Rs1,175.
