India’s Shriram Finance hits 11-month low as growth outlook cut, credit costs weigh | Reuters

Shriram Finance Shares Drop to 11-Month Low Amid Lowered Growth Outlook

Shares of India’s Shriram Finance (SHMF.NS) fell to an 11-month low on Monday after the non-bank lender cut its annual loan growth forecast and warned of higher credit costs, Reuters reported. The stock declined as much as 6.13% to 810.20 rupees, extending losses from Friday and marking an eighth consecutive day of declines. The company cited weak monsoon conditions and geopolitical uncertainty as reasons for reducing its assets under management growth forecast for fiscal 2027 to 15%-17% from 18%.

Brokerages Cite Drought-Related Risks and Asset Quality Concerns

Jefferies maintained its “buy” rating for Shriram Finance but lowered its target price to 1,145 rupees from 1,210 rupees. The brokerage highlighted rising borrower stress in states like Maharashtra, Karnataka, and Telangana.

Motilal Oswal warned that higher slippages and write-offs reflect drought-like conditions in several states, though it noted the lender’s overall asset quality remained “broadly stable.” JM Financial also flagged concerns over early-stage delinquencies and rural borrower stress, cutting its target price to 1,025 rupees from 1,175 rupees while keeping its “buy” rating.

Q2 Profit Surpasses Estimates Despite Outlook Downturn

Shriram Finance reported a nearly 60% jump in second-quarter profit to 36.77 billion rupees ($387.30 million), exceeding analysts’ estimates of 35.46 billion rupees, according to LSEG-compiled data.

FAQ

What caused Shriram Finance’s stock to fall?

The stock dropped due to a revised annual loan growth forecast and warnings of higher credit costs, driven by weak monsoon conditions and drought-related stress on borrowers, according to Reuters.

How did Shriram Finance perform financially in Q2?

The company reported a 60% increase in second-quarter profit to 36.77 billion rupees, beating analyst estimates of 35.46 billion rupees, as per LSEG-compiled data.

What do brokerages say about Shriram Finance’s outlook?

Jefferies and JM Financial both maintained “buy” ratings but lowered target prices, citing concerns over rising credit costs and deteriorating asset quality indicators. Motilal Oswal noted stable asset quality despite drought-related risks.