Shriram Finance shares fell to an 11-month low on October 26 after the lender cut its FY27 loan growth guidance to 15% to 17% from 18% and flagged higher credit costs, despite a second-quarter profit rise of about 59%.
Shares Slide Despite a Profit Beat
Shriram Finance, one of India’s large non-banking finance companies (NBFCs), was the top Nifty loser on Monday, October 26. The stock fell as much as 6.55% to ₹810.20 on the BSE in morning trade, its lowest in 11 months, according to IANS. Business Standard reported that the shares had slipped 10% over two sessions.
The sell-off came even though the company’s second-quarter numbers were strong. Reuters reported that profit rose nearly 60% to ₹3,677 crore, above the ₹3,546 crore analysts had expected. The market chose to focus on the outlook rather than the quarter.
What the Company Said About Growth
Management cut its assets under management (AUM) growth forecast for fiscal 2027 to 15% to 17%, from 18% earlier. The company cited weak monsoon conditions and geopolitical uncertainty, and said borrowers in drought-hit regions were under pressure. Executive Vice Chairman Umesh Revankar said on the earnings call that the company would grow within that range for the rest of the year.
The company also flagged that FY27 credit costs would run above the normalised level. A Business Standard report said credit costs were guided about 30 basis points above the normalised 2%, with net interest margins guided at 9.3% to 9.5%. A basis point is one hundredth of a percentage point, so 30 basis points is 0.30%.
Q2 FY27 Results at a Glance
| Metric | Reported Figure |
| Profit after tax | ₹3,677 crore, up 59.4% year on year |
| Net interest income | ₹8,661 crore, up 38.2% year on year |
| Assets under management | ₹3.29 lakh crore, up 17% year on year |
| Earnings per share | ₹15.63 (Q2 FY26: ₹12.27; Q1 FY27: ₹14.83) |
Assets under management is the total value of loans the company manages. The September quarter figure of 17% growth sits at the top of the new 15% to 17% guidance range for the full year.
How the Stock Has Moved
Shriram Finance closed at ₹865 on the NSE on Friday and traded around ₹830 by 10:26 am on Monday, according to Kotak Neo. The stock was heading toward an eighth consecutive session of losses and had corrected 14% over the past month. Its 52-week range on the BSE stretches from ₹710.40 to a high of ₹1,153.65.
The decline over the past two days has therefore come on top of a longer slide. The share price now sits well below its 52-week high, though still above the 52-week low.
What Analysts Flagged
Brokerage notes cited in the coverage pointed in two directions. ICICI Securities said the moderation in credit growth guidance and the higher credit cost amid a volatile monsoon remained a concern, but added that the recent correction in valuation offers upside potential. JM Financial said rising early delinquencies and rural stress were key concerns, and described deteriorating asset quality indicators amid drought-like conditions as a worry.
JM Financial also noted that a recent equity infusion and rating upgrades to AAA should cushion margins. These are attributed analyst views and are not recommendations.
Why Credit Cost Is the Swing Factor
Credit cost is the amount a lender sets aside to cover loans that may go bad. When credit costs rise, provisions rise, and that reduces profit even if lending income keeps growing. For a lender that has flagged pressure on borrowers in drought-hit regions, weather conditions can matter to repayment.
Finimize described the result as a case of two forces pulling in opposite directions: the lender is still growing, but the growth may be less profitable in the near term. Slower loan growth can also reduce operating leverage, because many costs do not fall just because lending cools.\
What to Watch in Coming Quarters
The next set of numbers will show whether credit costs stay within the range management has guided and whether the 15% to 17% growth rate is met. Investors will also track early delinquency data and the effect of the monsoon on borrower repayments.
The figures here describe how the stock and the company’s reported numbers stood on October 26. They are not a forecast of how the shares will trade in future sessions.
