“We Are Looking at Increasing the Share of New Commercial Vehicle Loans”

Shriram Finance, one of India’s largest non-banking financial companies, reported a 41 per cent rise in consolidated net profit to Rs 3,020.95 crore in the fourth quarter of 2025-26 and has managed to sustain both steady growth and profitability. In an interview, the NBFC’s MD and CEO Parag Sharma tells Falaknaaz Syed that the looming fuel price increase, along with lower rainfall, could impact rural economy, slowing down credit demand.

Q1. In the light of the ongoing West Asia conflict and El Nino forecast, what is your guidance for credit growth, deposit growth and margins for FY 27?

Ans. We have got an equity investment of around Rs 40,000 crore from Japan’s Mitsubishi UFJ Financial Group (MUFG) that acquired a 20 per cent stake and so we had initially estimated a faster pace in credit growth of around 18 per cent in the coming quarters. But given that there could be a fuel price hike due to the West Asia conflict and resultant inflationary trend, and also there is an expected shortage of rainfall, still around 15 to 18 per cent growth is what we feel can still be achieved. Deposit growth which is around 14 to 15 per cent could be slightly moderated to around 11 to 12 per cent as we have cut deposit rates by around 20-25 basis points in different tenors. However, we expect to maintain a net interest margin between 8.5 to 8.6 per cent.

Q2. Your Gross NPA rose to 4.58 per cent in Q4FY26, from 4.55 per cent reported in Q3FY26. Will there be any impact on asset quality because of the war?

Ans. We are keeping our eyes open–one for the fuel price increase and I also mentioned about the rainfall impact on the rural economy. That will have a bearing on the demand and result in slower growth for us.

But I do not think that will have any impact on the asset quality per se. Our provision coverage ratio has increased from 48 per cent to 50 per cent, factoring into the current scenario.

Q3. So what is the amount of cash on your balance sheet? And how fast will this cash be used up?

Ans. In a quarter, we have disbursed close to Rs 50,000 crore. And what we have got is Rs 40,000 crore of equity. So, in around four to five months is what we expect the entire cash to be utilised. The cash will be utilised not for growth alone but also to retire some of the debt.

But the overall target for us will be to grow faster with this capital and then over a period of time leverage to the existing levels, which was always at around four times. And then look at the overall asset growth to be at around 18 to 20 per cent over a period of time.

Q4. What is your outlook on interest rates?

Ans. If inflation is a concern and RBI wants to curtail it, there could be repo rate increases is what is generally being talked about.

But for us, when it comes to our cost of liabilities, I do not think there will be any increase because we have just been upgraded and the benefit of the rating upgrade has to come in. The liability cost for us on the balance sheet is around 8.59 per cent.

Q5. Any new product lines in the offing?

Ans. No, we are not looking at any new product. We are only looking at new commercial vehicles, which we were not focussing upon. So that is the only asset class where we will see substantial jump in our asset under management. This is an existing customer who has taken a used vehicle loan and is upgrading to a new vehicle. That is the customer segment we are looking at. That proportion is close to around 5 per cent now and we expect it to go up to 10-15 per cent in the coming years.

Q6. Any plans to apply for a Universal Bank licence?

Ans. We don't have any plans as of now. We are a non-banking finance company. We will continue to focus on retail lending and that focus will not go away. We are now supported by a very large bank MUFG and they too have no aspiration for us to convert to a bank. They are also very clear that this entity has good growth potential when it comes to all the asset classes, be it commercial vehicles, be it farm equipment, two wheelers. So we do have a huge runway in front of us.

We will capitalise on this huge equity which we have got and build our volumes and not look at any other asset class or different composition of the company as such.

Q7. Any Japanese Yen and US dollar funding lines?

Ans. So we currently have loans and bonds which are close to 20 per cent of liabilities. Some of them are yen-denominated. We did one

transaction in January, which was only Japanese Yen, which was again led by MUFG and SMBC. We have done very well when it comes to the

Taiwanese market, the Singaporean market. Japanese and Middle East is something which we will focus upon in the coming years. But as of now, for next two quarters we are not looking at any kind of fresh borrowings per se.