Shriram Finance Ltd (SHRIRAMFIN) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day and welcome to the Shriram Finance Limited Q2 FY '27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Umesh Revankar, Executive Vice Chairman, Shriram Finance Limited. Thank you and over to you, sir.
Umesh Revankar (Shriram Finance Limited): Yeah, thank you. Good evening, friends from India and Asia, and a warm welcome to all of you. Greetings to also to those who have joined the call from the western part of the world. To present our Q2 FY '27 call today, I have with me Managing Director and CEO, Mr. Parag Sharma; Joint Managing Director and CFO, S. Sunder; and Sanjay Kumar Mundra, Executive Director, Investor Relations. It has been a good second quarter of the year for Shriram Finance under current circumstances. Let us first look at the broad economic indicators that has a direct impact or indirect impact on our business. First, on the GDP growth, India's Q1 GDP growth of 7.8 in FY '26-27 has highlighted the resilience of country's economy with the data pointing towards strong consumption, rising investment, and sustained government capital expenditure as the key drivers of the expansion. The stronger-than-expected performance has reinforced expectation of broad-based economic momentum across multiple sectors. The IMF has raised India's GDP growth forecast to 7% for '26-27 up from 6.4 in July. The revision in the estimate comes on the back of stronger-than-expected momentum supported by resilient domestic demand and robust services activity. India's headline retail inflation rose to 5.4 5.54% in September from 4.82 in August, adding pressure on the country's central bank to further tighten monetary policy. Inflation
Umesh Revankar (Shriram Finance Limited): have been on the rise for 11 straight months in the world's fastest growing economy and has touched 22 months high in September. This increase is mainly due to higher fuel and food prices, which rose amid West Asia war driven supply disruption and delay in seasonal rains. India's food inflation climbed to 7.74% in September from 5.97% a month prior, with prices rising faster than faster in rural areas than cities. India's wholesale price based inflation climbed to 11.39% in September from 9.92 in August. Among key drivers of wholesale inflation were mineral oils, food articles, crude petroleum crude petroleum and natural gas, coal and lignite, basic metal, chemicals, textiles, rubber, plastic product and electric equipments. Now, coming to the RBI the key takeaway of RBI policy, repo rate increased by 25 basis point to 5.5. Policy stance shifted from neutral to calibrated tightening. GDP forecast revised upward to 7.1 from for FY26-27. CPI inflation forecast '26-27 raised marginally to 5.2. Coming to the rural economy which has major impact on our business. The 2026 Southwest Monsoon concluded at 87% of long period average with sharper shortfalls hitting regions like South Peninsula, Northeast Asia. India received its lowest rainfall in more than a decade owing to El Nino effect. The below normal and erratic rainfall has triggered moisture stress hurting major kharif crop like rice, royal soybean, corn, cotton, and pulses coupled with fertilizer shortage due to war. That will leave to some food issues in coming months. India's drought monitor said September 23 that 51.2% of India's geographical area was abnormally dry and or worse. The India's weak monsoon is beginning to weigh on rural consumption ahead of crucial festive season, with companies seeing pressure on demand for entry-level two-wheeler and cars, discretionary FMCG products and also consumer appliances. However, India's rural economy is becoming most more resilient to weak monsoon as growing share of non-crop activities, diversification into allied sectors, rising irrigation coverage, and reduced dependence on the rains. The RBI report said empirical findings suggest that while rainfall shortfall remains important for agriculture output, their association with allied activities and other rural activity has moderated over time. Other significant indicator is the GST collection. India's gross GST collection rose by 14.7 year-on-year to 2.04 lakhs in September compared to 1.77 lakh crore. On cumulative basis, gross GST revenue for April to September reached 12.46 lakh crore compared with 11.17 lakh crore during corresponding period of 25 '26 increase of 11.6%. Increased government spent on infrastructure is one positive indication and GST collection has really helped the infra spent. And OEM sales side
Umesh Revankar (Shriram Finance Limited): and stands at 3.09 lakh unit against 2.4 lakh unit sold in the Q2 FY26. Within commercial vehicle, medium and heavy commercial vehicle sales recorded growth of 37% in Q2 FY27 and stands at 1,21,171 units against 88,431 units sold in Q2 FY26. LCV's sales recorded a growth of 23.8% in Q2 and stands at 1.88 lakh unit versus 1.52 lakh unit sold in the Q2 previous year. Passenger vehicle has recorded highest growth of 30.7% and stands at 13.61 lakh unit against 40 10.41 lakh unit in Q2 '26. Two-wheeler again seen a record growth of 15.2% with sales of 40 64.33 lakh unit in Q2 against 55.86 lakh unit. Three-wheeler also have recorded very good healthy growth of 23.6% in Q2 with sales of 2.85 lakh units sold versus 2.31 lakh units sold in Q2 '26. Tractor again has recorded a good growth of 18.26% with 2.91 lakh units sold as against 2.4 lakh 46 lakh units sold in Q2 '26. Construction equipment has started the growth after decline in growth in the previous year with a 23% growth with 29,289 units sold against the 23. 23,758 units sold in Q2 '26. Coming to the EV, we are seeing a robust growth in EV throughout all the segments. In the passenger vehicle, it grew by 106% to 99,732 units against 48,250 units. In three-wheeler, it recorded 30.61% to 2.53 lakh unit against 1.94 lakh unit. Two-wheeler, it increased by 90.93% to 5.95 lakh unit against 3.11 lakh unit in the previous year. Now I shall ask my colleague Parag to take to take us through the operational performance for the quarter.
Parag Sharma (Shriram Finance Limited): Thank you. Good evening to everyone and welcome to our Q2 FY27 earnings call, and I trust you had the opportunity to peruse our results and the related investor presentation which has been posted on the website of the stock exchanges. We registered disbursement growth of 25.71% year-on-year. Our disbursement in Q2 FY27 this year aggregated to ₹54,079.02 crores versus ₹43,019.17 crores in Q2 FY26. Our AUM as on 30th September, 2026, registered a growth of 16.96% over Q2 FY26 and a 4.85% sequentially. Our AUM stood at ₹3,29, 021.72 crores as against ₹2,81,309.46 crores a year ago and ₹313, 798, that is ₹3,13,798.39 crores in Q1 FY27. Our Net Interest Margin in Q2 FY27 registered a growth of 38.2% year-on-year. We earned a earned a net interest income of ₹8,661 .04 crores in Q2 FY27 this year as compared to ₹6,266.84 crores in Q2 FY26. Our profit after tax grew at 59.37% and stands at ₹3,677.03 crores in Q2 FY27 as against
Parag Sharma (Shriram Finance Limited): is 2307.18 crore in Q2 FY '26. The profit after tax was 3,444.56 crore in Q1 FY '27. Our net interest margin in Q2 FY '27 was 9.52% as against 8.19% in Q2 FY '26 and 9.04% in Q1 FY '27. Our earning per share for the quarter stood at ₹15.63 as against ₹12.27 in Q2 FY '26 and ₹14.83 in Q1 FY '27. On our asset quality, Gross Stage 3 in Q2 FY '27 stood at 4.65% and Net Stage 3 at 2.31% as against 4.57% Gross and 2.49% Net in Q2 FY '26 and was 4.64% Gross and 2.33% Net in Q1 FY '27. Our credit cost on total asset for Q2 FY '27 stood at 2.03% as against 1.68% in Q2 FY '26 and 1.66% for Q1 FY '27. Our cost-to-income ratio was 22.52% in Q2 FY '27 as against 27.76% recorded in Q2 FY '26. Our cost-to-income ratio in Q1 FY '27 was 25.48%. The board also declared an interim dividend of ₹6.5 per share, that is 325%. The record date for the entitlement thereof has been fixed as October 29th, 2026. On the liability side, the total liabilities stands at 2,36,271, broken up into public deposits which is 31%, non-convertible debenture that is capital market borrowing at 15.71%, ECB loan and bond at 16.5%, the domestic bank borrowing and institutional borrowing is at 21%, and securitization at 14%. The cost of liabilities on balance sheet is 8.41% versus 8.56 in the previous quarter, with a reduction of 15 basis point. And from March, it is down by 18 basis point. The incremental cost of fund for the quarter was 7.3 versus 7.7 in the previous quarter. The liquidity coverage ratio was 303 versus 262 in the previous quarter. The liquidity buffer continues to be strong to repay our next quarter's liability. And leverage ratio was 2.16 times versus 2.14 times in the previous quarter, and in March was 3.82. The capital adequacy ratio is at 33.24% versus 34 in the previous quarter. I think with this, we'll open the forum for question and answer. Thank you.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Chintan with Autonomous. Please go ahead.
Chintan (Autonomous): Hi, good evening. Thank you for taking my question. Could we start with asset quality? There is a step-up in Stage 2, Stage 3 loans across
Chintan (Autonomous): subsidia sorry, across construction equipment, gold, MSME. Could you help us understand you know, some of the you know, what is what is kind of creating this increase in in stage two, stage three loans and how do you see you know, provisioning costs play out for the full year? Your guidance from the previous quarter was around 200 basis points. You know, what is your expectation given that we've seen some deterioration this quarter? That's my first question.
Umesh Revankar (Shriram Finance Limited): See, it is basically the seasonal and also from certain geography where there are less rainfalls. So, but we don't expect this to be a widespread thing. It should be contain itself in the festive period if the demand overall demand remains good. So, we do do not really see any kind of alarming situation in increase in the stage two or stage one. And we have sufficient provisioning to manage this. And our guidance will remain at 2% credit cost. And in the beginning itself we said that in in case of deficient rainfall, it can go up by around 30 basis point 30 basis point for a short period of time. It will be a temporary. I don't really think it is across. It is mostly in the area where it has seasonal impact.
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