Shriram Finance is targeting 18% growth this fiscal year, leveraging its partnership with Japanese financial services group MUFG to expand lending opportunities. According to reports from The Hindu BusinessLine, the collaboration brings additional capital, lower borrowing costs, and creates opportunities to offer new products. The partnership provides access to 1,490 Japanese manufacturers in India, with MUFG having strong relationships with major automotive companies including Suzuki, Toyota, Honda and Yamaha. Executive Vice Chairman Umesh Revankar stated that the company has relationships where MUFG will introduce their customers and retail requirements.
Shriram Finance's total AUM grew 15% year-on-year to ₹3.14 lakh crore in the first quarter, with the company maintaining its 18% growth target for the full financial year. As reported by The Hindu BusinessLine, the company's core commercial vehicle portfolio grew 19% to ₹1.47 lakh crore, while the passenger vehicle portfolio expanded at a faster pace of 21% to ₹68,650 crore during the quarter. Revankar indicated that Q2 growth will be around the same 15% level as Q1, but expects faster growth in subsequent quarters. The company is strategically shifting its vehicle financing mix from 90% used vehicles to 80-20 new-to-used, with passenger vehicle financing expected to maintain around 20% growth.
As reported by The Hindu BusinessLine, Shriram Finance is preparing to double its gold loan business to 5% of its portfolio, with the company targeting a gold loan portfolio of ₹20,000 crore compared with ₹7,513 crore in the first quarter. Currently, nearly two-thirds of its branches offer gold loans, with plans to add another 500 branches to that network. The company maintains no plans to seek a banking license despite its classification as an upper-layer NBFC, with leadership emphasizing the advantages of remaining nimble-footed as an NBFC for innovation and customer customization.
The company is launching bill discounting, supply chain financing and dealer financing from October 1 under its MSME portfolio, which currently accounts for around 13% of its assets. As reported by The Hindu BusinessLine, Shriram Finance is exploring financing opportunities across the ecosystems of dealers, sub-dealers, stockists and component suppliers. The company plans to add 2,000 to 3,000 employees to its current workforce of 80,000 and expand from 3,225 to 3,325 branches this fiscal year. After a six-month hiatus, the company will also add 100 new branches by the end of the financial year.
According to The Hindu BusinessLine, Revankar expressed confidence that the RBI's new draft guidelines on revolving credit will not impact the growth of its MSBE portfolio, as the proposals are currently in draft form. The RBI's proposal to restrict NBFCs from offering revolving credit products is expected to have minimal impact on Shriram Finance, with Revankar noting that the total NBFC size is ₹30 lakh crore and the estimate of such products is around ₹2 lakh crore. He emphasized that Shriram Finance's exposure to revolving products is limited, with a significant portion linked to trade advances given to dealers. The company grew 15% in Q1 and expects faster growth in the second half, with industry representatives having met with the RBI to explain the necessity of working capital features for customers.
