Shriram Finance closed the second quarter of FY2025–26 on a strong note, underlining its dominance in India’s Commercial Vehicle (CV) financing landscape, writes Ashish Bhatia.
Shriram Finance Ltd. reported that Assets Under Management (AUM) grew by 15.74 per cent Year-On-Year (YoY) to reach Rs. 2.81 lakh crore, reaffirming its position as one of the country’s largest retail asset financiers. Within this, the commercial vehicle portfolio retained its commanding share, accounting for Rs. 1.28 lakh crore or 45.55 per cent of the total AUM, a 14.21 per cent YoY rise and a sequential growth of 4.07 per cent. Managing Director and CEO, Y.S. Chakravarti, emphasised that the company’s disciplined growth is “rooted in our deep understanding of Small Road Transport Operators (SRTOs) and fleet owners, who form the backbone of India’s logistics network.” He added that the focus remains on building sustainable credit quality while expanding market share in both new and pre-owned vehicle segments.
For Q2-FY26, SFL reported a Profit After Tax (PAT) of Rs. 2,307 crore, marking an 11.39 per cent YoY and 7.03 per cent sequential growth. Total income increased 18.03 per cent YoY to Rs. 11,916 crore, while Net Interest Income (NII) rose 11.77 per cent to Rs. 6,267 crore. Commercial vehicles remained the largest contributor, bolstered by robust demand in the Medium and Heavy Commercial Vehicle (MHCV) and Light Commercial Vehicle (LCV) segments. The Gross Stage 3 assets in the segment improved to 4.79 per cent (down from 5.79 per cent a year ago), and Net Stage 3 holdings to 2.71 per cent, demonstrating effective credit monitoring. The coverage ratio strengthened to 44.63 per cent, reflecting improved provisioning efficiency and portfolio resilience. “Our asset quality is steady despite a higher book size,” said Chakravarti, noting that the lender’s risk management architecture and granular diversification continue to buffer the portfolio against cyclical slowdowns.
Core To Rural And Fleet Economies
Shriram Finance’s dominance in the used truck financing space continues to provide a competitive edge. The company’s deep distribution network, now spanning 3,225 branches across India, with a strong rural and semi-urban focus, enables it to reach small fleet operators and owner-drivers underserved by banks. The lender’s commercial vehicle portfolio grew consistently in South and West India, with states like Tamil Nadu, Maharashtra, Karnataka, and Gujarat remaining growth engines. These regions contributed significantly to both disbursements and recoveries. Chakravarti observed, “The resilience of the transport ecosystem, driven by construction, infrastructure and e-commerce logistics, is translating into healthy credit demand across the CV segment.”
Commercial Vehicle Edge Remains Intact
A granular breakdown of SFL’s AUM reveals that commercial vehicles continue to outpace most other segments.
| Product | Q2 FY26 (₹ million) | Q2 FY25 (₹ million) | YoY Growth | Share of AUM |
| Commercial Vehicles | 1,281,402.4 | 1,121,940.6 | 14.21 % | 45.55 % |
| Passenger Vehicles | 595,505.6 | 490,003.2 | 21.53 % | 21.17 % |
| Construction Equipment | 153,666.9 | 176,377.1 | -12.88 % | 5.46 % |
| Farm Equipment | 61,817.8 | 44,677.0 | 38.37 % | 2.20 % |
| MSME | 406,349.9 | 322,996.8 | 25.81 % | 14.44 % |
| Two Wheelers | 155,513.6 | 130,890.8 | 18.81 % | 5.53 % |
The commercial vehicle segment’s consistent double-digit growth reinforces SFL’s status as the go-to financier for India’s trucking community. The decline in gross NPAs, coupled with a balanced mix of pre-owned and new CV loans, underscores the stability of this cornerstone business.
The commercial vehicle segment’s consistent double-digit growth reinforces SFL’s status as the go-to financier for India’s trucking community. The decline in gross NPAs, coupled with a balanced mix of pre-owned and new CV loans, underscores the stability of this cornerstone business.
Liquidity and Funding Profile Remain Strong
On the liability side, SFL maintained a healthy borrowing mix that supports its lending momentum. Public deposits rose to Rs. 65,580 crore, accounting for 27.99 per cent of the borrowing profile, while term loans and securitisation contributed 17.37 per cent and 15.96 per cent, respectively. The Liquidity Coverage Ratio (LCR) stood at a robust 297 per cent as of September 30, 2025, underscoring strong liquidity management. “Our balance sheet strength, diversified funding sources, and disciplined ALM management give us flexibility to support the transport sector through cycles,” Chakravarti highlighted.
Digital Transformation Supporting Vehicle Financing
Digital enablement continues to be a key pillar of Shriram Finance’s operating strategy. The Shriram One App, now with 19 million cumulative downloads, serves both existing and new customers. Over 12.9 million non-Shriram customers have installed the app, reflecting growing digital adoption beyond the traditional customer base. The app handled 24,738 service requests during Q2-FY26, while the company’s web platform registered 9.1 million visitors. These digital touchpoints are steadily improving customer onboarding and post-loan engagement, especially for drivers and small business owners operating remotely. Chakravarti remarked, “Our digital strategy is designed to complement the high-touch branch model, enabling faster credit assessment and wider access for transport operators.”
Shriram Automall
Complementing its vehicle financing leadership, Shriram Automall India Ltd. (SAMIL), a subsidiary and strategic partner, continues to build India’s largest phygital marketplace for pre-owned vehicles and equipment. In Q2-FY26, SAMIL’s revenue from operations rose to Rs. 626 million, compared to Rs. 510 million in Q2-FY25, while PAT climbed 30 per cent YoY to Rs. 99 million. The Automall conducted thousands of auction events across 130-plus locations, providing end-to-end transaction solutions for pre-owned trucks, buses, and equipment. By leveraging data-driven valuation tools through Adroit Auto and PriceX, SAMIL enhances price transparency and liquidity in the used CV market, an ecosystem that directly feeds Shriram Finance’s refinancing business.
Robust Network And Rural Penetration
SFL’s deep rural network remains one of its strongest assets. Out of 3,225 branches, more than 55 per cent are located in semi-urban and rural areas, ensuring access to regions where road transport drives livelihood. The company’s employee strength of 78,833 and customer base of 9.66 million further reinforce its grassroots engagement. This distribution strength is pivotal in maintaining market leadership among SRTOs, a segment often underserved by mainstream banks but crucial for goods movement across India’s hinterland.
Financial Ratios and Return Metrics
Key performance metrics remained robust through the quarter:
- ROA: 2.89%
- ROE: 15.40%
- Net Interest Margin (NIM): 8.19%
- Cost-to-Income Ratio: 27.76%
- Tier I Capital Adequacy: 19.98%
- Total CRAR: 20.68%
These metrics indicate operational efficiency and capital strength even as the loan book expands across asset classes.
Asset Quality Trends Across Vehicle Subsegments
In the commercial vehicle book, SFL reduced Gross Stage 3 assets to Rs. 60,678 crore, improving asset quality by 100 bps YoY. Coverage ratios rose by 6.61 bps sequentially. The decline in NPAs was achieved alongside a 15.5 per cent growth in standard assets, reflecting both prudent credit screening and sustained borrower cash flow recovery. Passenger vehicles and construction equipment portfolios also recorded asset quality improvement, though the latter remained under watch due to sectoral cyclicality.
Consolidating The Transport Ecosystem
With the successful divestment of its housing finance arm to Warburg Pincus earlier this year, Shriram Finance has streamlined its focus on transport and small business financing. This renewed concentration aligns with macro tailwinds, government-led infrastructure push, rising freight movement, and revival in core sectors such as cement, steel, and construction. Chakravarti summarised, “We see sustained opportunities in vehicle finance, especially in used commercial vehicles and last-mile logistics. Our mission remains to empower the transport entrepreneur, leveraging both our branch presence and technology.”
