Shriram Finance Q4 Preview: Double-digit profit growth likely amid strong loan growth

During the January to March period, Shriram Finance shares gained nearly 13 percent

Shriram Finance is expected to post double-digit growth in both net interest income (NII) and net profit for the quarter ended March 2025 (Q4FY25), backed by strong loan growth and healthy disbursements, according to analysts. The retail-focused non-banking financial company (NBFC) is scheduled to announce its Q4 results on April 25, 2025.

According to Moneycontrol's poll, Shriram Finance’s NII is projected to increase by 14.3 percent year-on-year (YoY) to Rs 5,815 crore in Q4FY25, up from Rs 5,087 crore in the corresponding quarter of the previous year. Meanwhile, the company’s net profit is expected to rise by 10 percent YoY to Rs 2,133 crore, compared to Rs 1,945 crore a year ago.

Estimates of analysts polled by Moneycontrol are shown to be in a narrow range, meaning any positive or negative surprises may elicit a sharp reaction in the stock price. Among the brokerages polled, Kotak Institutional Equities rolled out the most bullish projections while Equirus forecasted the slowest growth for Shriram Finance.

What factors are driving the earnings?

Robust loan growth: Analysts at Equirus believe that Shriram Finance will report another strong quarter in terms of assets under management (AUM), expecting 19 percent YoY growth, driven primarily by strong demand in the used commercial vehicle (CV) segment.

Margin pressure likely: Several brokerages anticipate a contraction in the company’s net interest margins (NIMs), which are expected to decline by as much as 64 basis points to 9.4 percent in Q4FY25, compared to 10.04 percent in the same quarter last year. This is mainly due to a rising cost of funds. However, they also noted that going forward, cost of funds could improve, potentially helping margins to stabilise in upcoming quarters.

Asset quality holding up: Phillip Capital expects better collections during the quarter to support stable asset quality for the company.

What should investors keep an eye on this quarter?

Investors will closely track management's commentary on asset quality across the vehicle finance (VF) and non-vehicle finance segments, any impact on the gold loan business following recent regulatory tightening, and guidance on net interest margins and credit costs for FY26.

During the January to March period, Shriram Finance shares gained nearly 13 percent, significantly outperforming the Nifty 50 index, which fell by about 2 percent over the same timeframe.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.