(Reuters) -India’s Shriram Finance reported a smaller-than-expected fourth-quarter profit on Friday as high finance costs pressured its bottom line, despite the central bank easing some rules around capital requirements.
The non-banking finance company (NBFC) reported a near 10% year-on-year rise in standalone profit to 21.39 billion rupees ($250.5 million) for the quarter ended March 31, the slowest since December 2023 quarter.
Analysts, on average, had expected a profit of 22.24 billion rupees, according to data compiled by LSEG data.
The company’s financing costs rose 31% in the quarter, the most since the three months ended June 2023.
In February, the Reserve Bank of India partially reversed some rules around risk weights for banks and NBFCs that had slowed credit growth in the second and third quarters of fiscal 2025. Analysts had hoped the relaxation in rules would reverse that trend.
However, the pressure has persisted, with analysts at Elara Capital noting that the NBFC universe was set for a weak fourth-quarter, with earnings growth to remain modest due to measured asset growth expansion, elevated credit cost and operating cost pressures.
Shriram Finance’s net interest income, the difference between interest earned on loans given out and paid on funds borrowed, rose 13.4% to 60.51 billion rupees.
Its net interest margin rose to 8.25%, but the key profitability metric has not recovered after it tumbled from the March 2024 quarter’s 9.02%.
Its assets under management rose 17% to 2.63 trillion rupees in the fourth quarter, its slowest rise since the March 2023 quarter.
Shriram Finance’s shares ended the day 6% lower at 655.2 rupees.
($1 = 85.4010 Indian rupees)
(Reporting by Ashish Chandra in Bengaluru; Editing by Janane Venkatraman)
