Shriram Finance Limited — Credit Ratings, 06-03-2025: Credit Rating- New

Shriram Finance Limited reported consolidated assets of ₹2.54 trillion as of December 2024. The company has announced a board meeting on financial results for the quarter and half-year.

The organization achieved notable revenue growth, attributed to an expanding customer base and operational efficiencies, underpinned by its strong position in vehicle financing. Despite a challenging market, the shift towards higher-yield segments, supported by the merger with Shriram City Union Finance, has fueled momentum.

Net profit increased year-over-year, with an EPS reflecting this positive direction. Improved asset quality contributed significantly, lowering the problem loans ratio to 5.4%, a decline from 8.5% compared to March 2019. However, there remain inherent risks due to the company's focus on subprime customer segments.

Operational costs rose moderately, primarily due to investments in technology-driven collections and expansions. Nonetheless, these investments are expected to bolster long-term efficiency.

The balance sheet remains robust, supported by a 19.7% TCE/TMA ratio bolstered by gains from previous asset sales. The company maintains reasonable liquidity, with retail deposits aiding funding stability despite reliance on wholesale markets.

The overall strategic outlook is positive, indicating a focus on sustainable growth, market share increase, and enhancing risk management practices. Given the financial performance and growth potential, a hold position is suggested, with attention to potential risks in asset quality and market conditions.