Shriram finance

Shriram Finance Business Update Q1FY24

Shriram Finance Result update Q1FY24

Overview: Shriram Finance, a key constituent of the Shriram Group conglomerate, is a prominent non-banking financial company (NBFC) in India, specializing in a wide range of credit solutions including commercial vehicle, two-wheeler, car loans, home loans, gold loans, and small business financing. The conglomerate underwent a strategic consolidation in November 2022, merging Shriram Transport Finance, Shriram City Union Finance, and Shriram Capital to form Shriram Finance. This merger solidified its position as one of the largest NBFCs in the country with an impressive Assets Under Management (AUM) of INR 1,85,683 crore.

Operational Presence :

 As of June 30, 2023, Shriram Finance boasts a robust presence with an extensive network of 2,930 branches across India. The company’s workforce stands at 66,343 employees, servicing a substantial customer base of approximately 7.54 million. This extensive reach covers rural, semi-urban, and urban areas, thereby facilitating a comprehensive market outreach.

 Market Penetration and Position:

Shriram Finance holds a dominant position in the market for second-hand truck financing. Despite this, the market remains under-penetrated, with around 55-60% still served by private financiers and money lenders charging high-interest rates. This presents an opportunity for formal players to incrementally enhance their market share. Shriram Finance, leveraging its domain expertise, is strategically positioned to capitalize on this potential, thus cementing its foothold in the industry.

Financial Performance:  

In Q1FY24, Shriram Finance exhibited commendable financial performance. Interest income surged by 13.3% YoY (+3.5% QoQ) to INR 76,880 million. Correspondingly, interest expenses witnessed an increase of 18.1% YoY (+7.5% QoQ) amounting to INR 34,875 million. Net Interest Income (NII) exhibited a robust growth of 9.7% YoY, reaching INR 42,004 million. The Net Interest Margin (NIM) contracted by approximately 25 basis points (QoQ) to 8.3%, attributed to declining yields and an uptick in borrowing costs.

Profitability and Efficiency:

The Profit After Tax (PAT) exhibited impressive growth, surging by 25.1% YoY (+28% QoQ) to INR 16,754 million. However, it’s noteworthy that the Cost-Income ratio stood at approximately 31% (compared to the previous year’s ~27%) due to a notable 33% YoY increase in employee expenses. This reflects the company’s focus on expansion and enhancing operational capabilities.


As of June 30, 2023, Shriram Finance’s Price to Book Value stands at 1.60, a notable improvement from 2.2 in FY22. Return on Equity (ROE) and Return on Assets (ROA) exhibited year-on-year improvements of 70 basis points and 30 basis points, reaching 15.19% and 3.08%,

Asset Quality:

A significant highlight of the quarter was the notable enhancement in asset quality. Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) ratios demonstrated improvement, declining to 6% and 3.1%, respectively, from 6.2% and 3.3% in the preceding quarter (Q4FY23). Additionally, the Provision Coverage Ratio (PCR) for Stage 3 loans witnessed a substantial increase of around 240 basis points (QoQ) to approximately 52%, underscoring prudent risk management practices.


Shriram Finance’s merger-driven consolidation, comprehensive market outreach, dominant position in second-hand truck financing, commendable financial performance, and focused approach towards profitability and asset quality reinforce its stature as a leading player in the NBFC landscape. The company’s strategic maneuvers and operational excellence position it advantageously to harness future opportunities and navigate challenges, further bolstering its credibility and standing in the financial industry.


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