Shriram Finance sees Q1 MSME slowdown as seasonal, reaffirms FY26 growth target

Shriram Finance flagged a seasonal slowdown in its MSME loan book during the April–June quarter, with growth moderating to just 3.5–4 percent sequentially. However, management remains confident of achieving 15 percent full-year growth, banking on festive-led demand in the coming quarters

Lovisha Darad

July 26, 2025 / 07:06 IST

Shriram Finance’s MSME growth cools in Q1FY26, but management expects a strong rebound in Q2 and Q3.

Shriram Finance underlined moderation in the MSME book growth during the April–June quarter (Q1FY26), but expressed confidence in meeting its full-year guidance in its post-results analyst concall. The MSME segment, which had seen around 10 percent sequential growth in the year-ago quarter (Q1FY25), expanded by only 3.5 to 4 percent this time, raising concerns about a slowdown in disbursal momentum.

Addressing this during the earnings call, Y S Chakravarti, MD & CEO, attributed the moderation to seasonal factors.

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“There was a slowdown in demand in the first quarter. Typically, Q1 is soft due to the post-festival lull, while demand starts picking up from the second quarter in preparation for the festive season in Q3,” he explained. Despite the subdued start, the company remains on track to achieve its 15 percent growth guidance in the MSME portfolio for FY26.

While analysts flagged the sharp deceleration in quarter-on-quarter accretion compared to Q1 of last year, the management said that MSME growth should be assessed on a year-on-year basis, given the seasonality in business cycles.