Shriram Finance Share Price Drops 8% Despite Strong Q4 Results: What’s Next?

Shriram Finance shares faced a sharp 8% drop, hitting an intraday low of ₹600 on the Bombay Stock Exchange (BSE) on Monday, even after reporting solid performance for the March 2025 quarter. Let's dive deeper into the performance, key highlights, and the company's outlook.

Market Performance

Despite the company's substantial numbers, the stock saw significant pressure. The 8% decline in Shriram Finance's share price can be attributed to higher-than-expected credit costs despite the company reporting strong year-on-year growth.

Main News

• Net Profit Growth: Shriram Finance posted a 10% YoY increase in standalone net Profit, which reached ₹2,139 crore for Q4 FY2025. This was driven by impressive disbursements and a solid increase in net interest income (NII).
• Revenue Growth: Total revenue for the quarter surged by 21% YoY, reaching ₹11,460 crore, compared to ₹9,498 crore in the same period last year.
• Net Interest Income (NII): NII saw a 13% increase, rising to ₹6,051 crore from ₹5,336 crore in Q4 FY2024.
• Fee and Commission Income: The company also saw a notable rise in fee and commission income, which more than doubled to ₹331 crore.
• Loan Book Expansion: Shriram Finance's loan book grew to ₹2.45 lakh crore, up from ₹2.08 lakh crore in FY24.
• Credit Quality: While the company's asset quality remained steady, the gross non-performing assets (NPA) stood at 4.55%, and net NPA at 2.64%.

Company Details

• One-Time Gain: The increase in Profit before tax was partially due to a one-time gain of ₹1,657 crore from the sale of Shriram Housing Finance's stake, which is now known as Truhome Finance.
• Capital Adequacy: The company's capital adequacy ratio remained strong at 20.66%, well above the regulatory norms.
• Management's Comments: Arul Chakravarthi, Managing Director & CEO of Shriram Finance, emphasized the company's focus on digital expansion, customer experience, and leadership in rural and semi-urban lending.

Financial Breakdown

• Revenue: ₹11,460 crore (up 21% YoY)
• EBITDA: N/A
• EBITDA Margins: N/A
• Net Profit: ₹2,139 crore (up 10% YoY)
• Loan Book: ₹2.45 lakh crore (up from ₹2.08 lakh crore)
• Credit Cost: Increased by 18% QoQ to 2.4% of AUM
• Gross NPA: 4.55%
• Net NPA: 2.64%
• Capital Adequacy Ratio: 20.66%

Summary of the Article

Despite strong revenue and net Profit growth, Shriram Finance's share price fell due to an uptick in credit costs, disappointing investors. The company's performance was solid, with revenue growth and an impressive loan book expansion, but the rise in credit costs raised concerns about asset quality moving forward. The outlook for the company remains positive, with expectations for stable growth in the coming fiscal year and a focus on digital transformation. Investors must follow the updates closely as the market reacts to these quarterly results.