Shriram Finance has geared up for a strong performance in the second half of FY26, buoyed by rising rural demand, easing funding costs, and diversified loan growth across multiple segments.
The company expects disbursements to increase by 15–17 per cent in the coming quarters, led by farm equipment, MSME, and passenger vehicle loans, even as the construction equipment segment remains subdued.
According to management, October saw robust business activity, signaling solid momentum heading into the festive quarter. The company’s strategy of focusing on high-yield, low-risk segments such as MSME and agriculture lending continues to deliver steady growth, supported by improving rural cash flows and strong demand for small-ticket financing.
Shriram Finance’s cost of funds has moderated to 8.83 per cent in Q2 FY26 from 8.88 per cent in the previous quarter. Net interest margins (NIMs) are expected to remain around 8.25–8.30 per cent for the fiscal year, with the potential to reach 8.5 per cent by year-end, aided by cost efficiency and steady loan yields.
Asset quality remained stable during the quarter, with gross Stage 3 assets at 4.57 per cent and Stage 2 assets at 6.92 per cent. The company’s credit cost stood at 1.68 per cent in Q2, and while a marginal increase toward 2 per cent is anticipated over the next few years due to sectoral pressures, overall portfolio health remains resilient.
Consolidated assets under management (AUM) rose to Rs 2.81 trillion, up 15.7 per cent year-on-year, with MSME, farm equipment, and passenger vehicle loans driving expansion. The MSME segment now contributes 14.4 per cent of the total AUM, underscoring its growing importance in the company’s portfolio mix.
Shriram Finance also plans to maintain public deposits at around 30 per cent of total liabilities while continuing to tap non-convertible debentures (NCDs) and select offshore borrowings to diversify its funding sources. The company’s new subsidiary, Shriram Overseas Investment, is awaiting regulatory approval to begin operations as a primary dealer.
With a well-diversified portfolio, a strong foothold in rural India, and improving funding conditions, Shriram Finance remains confident of sustaining growth momentum and delivering stable returns in the second half of FY26.
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