Shares of Shriram Finance Ltd dropped as much as 4% on April 25, 2026, touching an intraday low of Rs 983.55 on the NSE, even as the company reported a 41% year-on-year surge in Q4 FY26 net profit to Rs 3,013.57 crore, per its BSE filing dated April 24, 2026. Revenue from operations rose 9.2% to Rs 12,509 crore in the same quarter, against Rs 11,454 crore a year earlier. The stock closed at Rs 1,011.30, still down from its 52-week high of Rs 1,108.
Why Strong Numbers Triggered a Selloff
The answer is net interest margin. Net interest income for Q4 FY26 rose 15.58% to Rs 6,994.08 crore from Rs 6,051.19 crore in Q4 FY25, per the company’s official press release. But investors focused on what the NIM trajectory implies going forward rather than the absolute profit beat. The pattern repeats a dynamic seen in Q4 FY25, when Shriram Finance’s reported NIM dipped 77 basis points year-on-year to 8.25% from 9.02%, sending shares down 9% in a single session despite a 10% profit rise.
Excess liquidity on the balance sheet is the structural drag. In Q4 FY25, Emkay noted that NIM dropped due to excess liquidity of around Rs 12,000 crore following large ECB loans raised in December 2024 and Q4. A similar dynamic large-scale external borrowing ahead of deployment has weighed on margin optics again in Q4 FY26, even as the underlying loan book continues to grow.
The Full-Year Picture
For the full financial year ended March 31, 2026, Shriram Finance reported a profit after tax of Rs 9,998.15 crore, up 20.87% from Rs 8,271.61 crore in FY25 (excluding FY25’s one-time exceptional gain of Rs 1,489.39 crore from the sale of its stake in Shriram Housing Finance Limited). Full-year net interest income rose 14.09% to Rs 26,051.44 crore from Rs 22,835.09 crore.
AUM crossed Rs 3 trillion (Rs 3,00,000 crore) during FY26, a milestone the company has highlighted as a marker of scale. The board also approved a final dividend of Rs 6 per share, taking the total FY26 dividend to Rs 10.80 per share, combining the Rs 4.80 interim dividend paid in November 2025.
MUFG Stake: The Structural Angle the Market Is Underpricing
The detail most post-results coverage has buried is the MUFG Bank relationship. The board approved the appointment of two senior MUFG Bank executives, Mr. Morihiko Fuji and Mr. Shinichi Fujinami, as Non-Executive Non-Independent Directors effective April 24, 2026, following MUFG’s strategic investment through allotment of 47,11,21,055 equity shares under an agreement dated December 19, 2025. A Japanese megabank, acquiring a 20% stake and placing directors on the board is a long-term institutional validation that goes beyond any single quarter’s NIM reading.
Why Brokerages Are Holding Their Buy Calls
Multiple brokerages are treating the stock drop as an entry point rather than an exit signal. Motilal Oswal maintains a Buy rating, citing broad AUM growth and healthy disbursements, and notes that Shriram has not fully tapped non-vehicle loan distribution, leaving room for sustained growth. Their target price is Rs 790, approximately 20% above post-result levels. Nuvama raised its target to Rs 760 with a Buy rating, expecting NIM to recover to 8.5–8.6% as excess cash is deployed and projecting approximately 15% AUM growth in FY27.
Nomura noted that at current levels, the price-to-book valuation of approximately 1.7x FY27 looks attractive for a company that can deliver 17–19% CAGR in AUM and PAT through FY27.
The re-rating math is straightforward: if Shriram deploys its excess liquidity at target yields through Q1 and Q2 FY27, NIM recovers toward 8.5%, credit costs stay contained, and the AUM trajectory holds at 15%, the stock at current levels is priced well below its fundamental value. That is the brokerage thesis in one sentence.
What Has to Happen for the Bull Case to Work
Management has guided that NIM should improve to 8.5–8.6% in FY27 as excess cash is put to work and that AUM will grow by approximately 15%. Crucially, the company does not foresee any further increase in stress or credit costs in FY27 and anticipates improvement in the overall credit environment. If those three things materialize (NIM recovery, 15% AUM growth, and contained credit costs), the selloff on April 25 will look like a textbook overreaction within 12 months.
The risk is equally clear: a further delay in liquidity deployment, a deterioration in commercial vehicle credit quality, or a macro shock that tightens NBFC funding conditions would all put the FY27 guidance at risk.
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FAQ
Why did Shriram Finance shares fall after strong Q4 FY26 results?
The 41% profit jump did not offset investor concern over net interest margin pressure, driven by excess liquidity on the balance sheet following large external commercial borrowings. The market sold the stock on NIM optics despite headline profit growth the same pattern that sent shares down 9% after Q4 FY25.
What were Shriram Finance’s Q4 FY26 results?
Net profit rose 41% year-on-year to Rs 3,013.57 crore. Revenue grew 9.2% to Rs 12,509 crore. Net interest income rose 15.58% to Rs 6,994.08 crore. Full-year PAT was Rs 9,998.15 crore, up 20.87% over FY25 (excluding the prior year’s exceptional item), per BSE filings.
What is the Shriram Finance share price target from Nomura, Motilal Oswal, and Nuvama?
Motilal Oswal targets Rs 790 with a Buy rating. Nuvama raised its target to Rs 760 with a Buy, projecting 15% AUM growth and NIM recovery to 8.5–8.6%. Nomura views the current 1.7x FY27 price-to-book as attractive given the company’s 17–19% CAGR potential in AUM and PAT.
What dividend has Shriram Finance declared for FY26?
The board recommended a final dividend of Rs 6 per share, taking the total FY26 payout to Rs 10.80 per share (including the Rs 4.80 interim dividend paid in November 2025). Shareholder approval is required at the 47th AGM scheduled for July 10, 2026.
