Shriram Finance shares hit an 11-month low on Monday after the lender cut its FY27 AUM growth guidance to 15-17 percent from 18 percent and flagged elevated credit costs, despite a 59.4 percent rise in quarterly profit.
Shriram Finance shares fell to their lowest level in eleven months on Monday, dropping as much as 6.55 percent to 810.20 rupees on the Bombay Stock Exchange and emerging as the session's biggest Nifty loser, after the non-bank lender cut its full-year loan growth outlook and warned that credit costs would stay elevated. By 10:57 a.m. local time the stock had pared the fall to 829.20 rupees, still down 4.36 percent, and by midday it traded 5.03 percent lower at 821.50 rupees.
Management lowered its assets under management growth guidance for the 2026-27 financial year to 15 to 17 percent from 18 percent, citing a weak and erratic monsoon, uncertainty from the West Asia conflict and borrower stress in drought-affected regions. Credit costs on total assets were 2.03 percent in the quarter, against 1.68 percent a year earlier and 1.66 percent in the previous quarter, and executive vice-chairman Umesh Revankar said credit costs could rise by 30 to 40 basis points in some geographies for a short period, with the loan-book credit cost of 2.3 percent expected to hold for one or two quarters before normalising.
The guidance cut overshadowed a strong quarter: profit after tax rose 59.4 percent to 3,677 crore rupees and assets under management grew 17 percent from a year earlier to 3.29 trillion rupees, according to The Hindu BusinessLine's account of the results announced last Friday. Four brokerages kept buy ratings but cut their price targets, with JPMorgan trimming its target to 1,095 rupees from 1,215, Citi to 1,100 from 1,200 and HSBC to 1,000 from 1,140, while Motilal Oswal retained a target of 1,155 rupees.
The share move, the guidance cut and the credit cost figures are reported consistently across the BusinessLine account, the IANS wire report and brokerage notes carried in the same coverage, so the market reaction is not resting on a single source. One detail differs between summaries, with another account putting profit and interest income slightly differently, so this story uses the BusinessLine figures throughout rather than mixing totals from different summaries. The results themselves were announced on Friday, which means Monday's story is the market's verdict on those results, not a fresh earnings release.
The episode shows how quickly a guidance cut can outweigh a profit beat for a lender exposed to rural borrowers: drought stress in Maharashtra, Karnataka and Telangana, named by analysts as the source of the pressure, turns a monsoon shortfall into loan losses. If credit costs do normalise within the one to two quarters management guides, the sell-off will look like an overreaction; if the stress spreads beyond the drought districts, the lower growth target will be the first of several resets, and the next quarterly results will show which it is.