Strong guidance positive for Shriram Finance

Shriram Finance Ltd (SHFL) posted a beat on estimates for Q2FY26, with good growth and improved asset quality.

- DEVANGSHU DATTA

There was improved net Stage-3 and reduced nonperforming loans (NPLs).

Credit cost remains moderate at well under 2 per cent of average assets under management (AUM), which is the guidance target for FY26.

The guidance was confident and stable for volume growth driven by market share gains and hopes of better demand in H2FY26.

While AUM growth guidance is unchanged at 15 per cent, the management believes AUM growth for FY26 would surpass the guidance.

AUM growth was good across used commercial vehicles (CV), used passenger vehicles (PV) and even micro, small and medium enterprises (MSMEs) with.

This changes a trend of declines for the previous five quarters.

AUM up 7 percent in H1F26.

The improved growth in vehicles implies market share gains. An enhanced distribution network resulted in MSME growth.

The management expects better demand driving vehicle volumes, along with more market share gains. There is a limited positive impact of goods and services tax (GST) cuts.