Priyanka Tiwari
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Suspense crime, Digital Desk : On Monday, in an interview with Reuters, Shriram Finance's CEO YS Chakravarti stated the company is considering borrowing funds in Japanese yen to further diversify its funding sources.
The firm is still in the preliminary stages of developing strategies and is contemplating international bonds targeted towards corporate investors or a straightforward bank loan.
Chakravarti reiterated, “We are still exploring the market,” while refraining from providing specifics on the potential fundraising amount or timeframe.
Current Borrowing Profile of Shriram Finance
As of March 2025, Shriram Finance's total borrowings consisted of:
- Approximately 15% of total borrowings were External Commercial Borrowings (ECBs).
- Roughly 6.8% of its borrowing profile were overseas bonds.
- In December, Shriram Finance secured a multi-currency social loan of $1.28 billion alongside bonds in dollars, euros, and dirhams, all with a maturity period of five years.
Financial Performance and Growth Outlook
Last Friday, Shriram Finance reported a quarterly profit that fell short of analysts’ expectations with high financing costs being the primary driver of a share price decline of nearly 9% on Monday.
In view of these results, the company remains positive about growth:
The company increased the AUM (Assets Under Management) target growth for FY2025-26 from 15% to 17-18%.
As of March 31, Shriram’s Assets Under Management (AUM) reached 2.63 trillion rupees (shriram aum in GBP is approximately $30.96 billion) with an increase of 17% year on year.
Shriram Finance is expected to grow passenger vehicle loans and small and medium enterprises SMEs loans to achieve the growth targets in finer lines business. Shriram also plans to develop new products like unsecured business loans and supply chain financing.
Borrowing Costs and the Management of Liquidity
The company plans to utilize the 300 billion rupees of excess cash on hand to:
Achieve financial net interest margins of 8.50%-8.80% for the year 2023-24 (in contrast to 8.25% in Q4 FY 23).
Bargain for better, lower borrowing costs because of the strong liquidity position.
“Given our current liquidity levels, we will be in a position to bargain for an attractive interest rate. We expect our cost of funds to drop from current levels,” Chakravarti said.
