The company’s total income for the quarter stood at Rs 11,921 crore, marking a growth from Rs 10,097 crore in Q2FY25. Interest income also witnessed a healthy rise, increasing to Rs 11,551 crore from Rs 9,815 crore a year ago.
Total expenses rose to Rs 8,808 crore during the quarter under review, up from Rs 7,345 crore in the corresponding quarter last fiscal. Despite the increase in expenses, the company delivered steady profitability and showcased improved asset quality metrics.
Shriram Finance’s gross Non-Performing Assets (NPAs) declined to 4.57% of gross advances as of September 30, 2025, down from 5.32% in the same quarter last year. Net NPAs also moderated to 2.49% from 2.64% year-on-year, indicating improved asset quality and better loan performance.
Here’s what various brokerage firms are saying:
Nuvama: Buy| Target price: Rs 870
Nuvama has reiterated its “Buy” rating on Shriram Finance (SFL) and raised its target price to Rs 870 (from Rs 710), valuing the stock at 2.6x FY26E book value. The upgrade comes on the back of lower credit costs, improving margins, and steady AUM growth.In Q2, SFL reported 3% QoQ AUM growth, used surplus liquidity efficiently, and saw NIM expand by 8 bps. Credit costs stayed below 2% of AUM for the second quarter in a row. While GS2 assets fell 2% QoQ, GS3 assets rose 4%.Nuvama notes recent senior management changes are part of a normal succession process. Looking ahead, it says SFL’s priority is to reduce cost of funds, helping retain customers even as their credit ratings improve, which should strengthen productivity and business growth.
Elara: Accumulate| Target price: Rs 801
Elara Securities has raised its target price on Shriram Finance Ltd (SFL) to Rs 801 from Rs 734, while maintaining an ‘Accumulate’ rating. The revision follows a strong Q2FY26 showing, with PAT rising 7% QoQ and 11% YoY to Rs 2,310 crore, supported by steady topline and margins.
Net interest income grew 4% QoQ as funding costs eased 5 bps. The NIM held steady amid liquidity normalization, and cost-to-income ratio improved 121 bps QoQ to 30.1% due to lower staff costs.
AUM rose 3.3% QoQ and 15.7% YoY to Rs 2.81 lakh crore, driven by farm, PV, and CV loan growth, though construction equipment AUM declined 7% QoQ due to weak infra demand. MSME AUM grew 25.8% YoY and now forms 14.4% of total AUM, adding diversification.
Asset quality stayed stable with Stage 3 assets at 4.57% (down 25 bps) and Stage 2 at 6.92% (down 37 bps). PCR stood at 46.7%. Elara expects credit costs to remain around 2.1% and RoE to improve from FY25–28E levels of 16.5%.
Following a 21% rally in the last three months, the brokerage sees further upside, basing its revised target on 2x FY27E PABV.
InCred Equities: Add| Target price: Rs 870
InCred believes that rising diversification and deep rural reach will enable healthy AUM growth, buoyed by a good monsoon season and a pick-up in investment activity. The brokerage firm has retained the stocks in its high-conviction stocks list with an ADD rating and a target price of Rs 870, valuing the stock at ~2.1x FY27F BV. Downside risks: Slower-than-expected growth and a spike in fresh loan slippage.
HDFC Securities: Add| Target price: Rs 750
Shriram Finance’s Q2FY26 earnings were broadly in line with expectations, supported by lower credit costs at 1.95%, although net interest margins (NIMs) came in below estimates. AUM growth moderated to 15.7% YoY, down from 21% in FY24 and 17% in FY25, reflecting a slowdown in disbursement growth (+10% YoY).
Sequential growth was noted in the commercial vehicle (CV) segment, while construction equipment (CE) and two-wheeler loan disbursements remained sluggish. Credit costs held steady at 1.95%, and GS II declined, reflecting resilient asset quality despite macro challenges.
While GST rate cuts bode well for auto sales, used CV/PV loan growth is still constrained by supply-side issues. The brokerage has revised its FY26/FY27E estimates to account for softer NIMs and maintains an ‘ADD’ rating with a revised RI-based target price of Rs 750, implying 2x Sep-27 ABVPS.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)