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Shriram Finance dismisses auto loan slowdown fears, eyes 18% asset base growth this year
Umesh Revankar, Executive Vice Chairman of Shriram Finance, stated that the company is expanding its branch network to drive growth in its gold loan business and expects double-digit growth in this portfolio.
Umesh Revankar, Executive Vice Chairman of Shriram Finance, dismissed concerns about a slowdown in auto loan demand, pointing to steady credit demand across urban and rural markets.
"We have not really seen any slowdown in the credit demand. The festive demand was quite good for two-wheelers, tractors, and passenger cars," he said.
In the July-September quarter, vehicle financiers faced mixed results, with loan disbursement growth ranging from a decline of 1.2% to an increase of 15.5% year-on-year, indicating that challenges in the microfinance and unsecured credit sectors have started spilling over into auto financing.
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Revankar expects the company’s asset under management (AUM) to grow by 17-18% in the second half of the year, similar to the first half.
He attributed the stable demand in rural areas to higher crop output and better minimum support prices (MSP), which have boosted liquidity.
While some competitors have reported pressure on disbursements and AUM growth, Revankar clarified that Shriram Finance has benefited from the price increases of nearly 30-35% in used commercial vehicles (CVs) over the past year, contributing significantly to their growth.
However, further price hikes are unlikely in the near term, meaning growth will rely more on demand and government infrastructure spending in the coming months.
Over 50% of its loan disbursements are for auto loans, including commercial and passenger vehicles. While the company saw a decline in net interest margins during Q2FY25, its asset quality improved significantly, achieving the best levels seen in over a decade for the Shriram Group.
MSME lending remains stabile, as the majority of loans in this segment are secured against collateral, reducing risk.
The company's personal loans portfolio is relatively small and remains stable due to a focus on lending only to existing customers with a proven repayment history.
The company is expanding its branch network to support growth in its gold loan business and anticipates double-digit growth in this portfolio.
Revankar expects the net interest margin (NIM) to remain stable at 8.7% this year.
The company, which has a market capitalisation of ₹1,11,982 crore, has seen its shares rise 45% over the last year.
"We have not really seen any slowdown in the credit demand. The festive demand was quite good for two-wheelers, tractors, and passenger cars," he said.
In the July-September quarter, vehicle financiers faced mixed results, with loan disbursement growth ranging from a decline of 1.2% to an increase of 15.5% year-on-year, indicating that challenges in the microfinance and unsecured credit sectors have started spilling over into auto financing.
.
Revankar expects the company’s asset under management (AUM) to grow by 17-18% in the second half of the year, similar to the first half.
He attributed the stable demand in rural areas to higher crop output and better minimum support prices (MSP), which have boosted liquidity.
While some competitors have reported pressure on disbursements and AUM growth, Revankar clarified that Shriram Finance has benefited from the price increases of nearly 30-35% in used commercial vehicles (CVs) over the past year, contributing significantly to their growth.
However, further price hikes are unlikely in the near term, meaning growth will rely more on demand and government infrastructure spending in the coming months.
Over 50% of its loan disbursements are for auto loans, including commercial and passenger vehicles. While the company saw a decline in net interest margins during Q2FY25, its asset quality improved significantly, achieving the best levels seen in over a decade for the Shriram Group.
MSME lending remains stabile, as the majority of loans in this segment are secured against collateral, reducing risk.
The company's personal loans portfolio is relatively small and remains stable due to a focus on lending only to existing customers with a proven repayment history.
The company is expanding its branch network to support growth in its gold loan business and anticipates double-digit growth in this portfolio.
Revankar expects the net interest margin (NIM) to remain stable at 8.7% this year.
The company, which has a market capitalisation of ₹1,11,982 crore, has seen its shares rise 45% over the last year.
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