Shriram Finance
Stock Snapshot
Price Performance
Vista Outlook
Basis of our Recommendation
Shriram Finance's recent management commentary highlights a strategic pivot towards higher-growth segments such as MSME and gold loans, supported by a significant capital infusion from MUFG, which is expected to enhance funding economics and lower borrowing costs. This shift is crucial as it aligns with Vista's forecast of accelerating revenue growth and improving margins, projecting an 18% CAGR in AUM over the next two years. However, management remains cautious about potential macroeconomic headwinds, including rising crude prices and monsoon volatility, which could impact asset quality and rural cash flows. The NBFC sector's improving pricing power and strong demand for credit further bolster Shriram's competitive position, despite intensifying market competition. Over the next 12-24 months, key opportunities include leveraging the expanded product mix and branch network for market penetration, while watchpoints include monitoring asset quality and geopolitical risks. Overall, Vista's outlook reflects confidence in Shriram's ability to navigate these challenges while capitalizing on growth opportunities, with an expected upside of approximately 35% over the next year
Why We Like This Stock
- Strategic partnership with MUFG enhances funding economics and supports growth in higher-yield segments
- Projected 18% CAGR in AUM reflects strong demand and effective product diversification
- Improving pricing power in the NBFC sector supports margin expansion and competitive positioning
Things To Watch Out For
- Potential macroeconomic headwinds, including rising crude prices and monsoon volatility, could impact asset quality
- Intensifying competition in the NBFC sector may pressure margins and market share
- Geopolitical uncertainties pose risks to operational stability and borrower repayment capacity
Key Parameters
Financial Snapshot
View Technicals Analysis →| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 20,105 | 25,412 | 26,612 | 30,866 | 36,532 |
| Profit Before Tax (Cr.) | 9,481 | 10,817 | 13,301 | 17,688 | 20,928 |
| PBT Margin | 47.2% | 42.6% | 50.0% | 57.3% | 57.3% |
| Net Profit (Cr.) | 6,184 | 7,717 | 9,160 | 12,116 | 14,335 |
| Earnings Per Share | 26.1 | 32.7 | 38.9 | 51.5 | 60.9 |
Analyst Recommendations
| Broker | Recommendation | Target Price | Date |
|---|---|---|---|
| Motilal Oswal | ▲ Buy | 1,220 | 30-Sep-2026 |
| JPMorgan | ▲ Buy | 1,215 | 28-Sep-2026 |
| BofA | ▲ Buy | 1,210 | 24-Sep-2026 |
| CLSA | ▲ Outperform | 1,200 | 24-Sep-2026 |
| UBS | ▲ Buy | 1,220 | 22-Sep-2026 |
| Elara Capital | ▲ Buy | 1,300 | 27-Jul-2026 |
| Emkay Global | ▲ Buy | 1,200 | 27-Jul-2026 |
| HSBC | ► Hold | 1,140 | 27-Jul-2026 |
| ICICI Securities | ▲ Buy | 1,225 | 27-Jul-2026 |
| IDBI Capital | ▲ Buy | 1,200 | 27-Jul-2026 |
| Jeffries | ▲ Buy | 1,210 | 27-Jul-2026 |
| Moneycontrol | ▲ Overweight | nan | 27-Jul-2026 |
| Nomura | ▲ Buy | 1,235 | 27-Jul-2026 |
| Prabhudas Liladhar | ▲ Buy | 1,250 | 27-Jul-2026 |
| Axis Securities | ▲ Buy | 1,200 | 26-Apr-2026 |
| Citigroup | ▲ Buy | 1,180 | 26-Apr-2026 |
| HDFC Securities | ► Add | 1,100 | 26-Apr-2026 |
| Kotak Securities | ► Add | 1,100 | 26-Apr-2026 |
| Macguire | ▲ Buy | 1,220 | 26-Apr-2026 |
| Morgan Stanley | ► Equalweight | 1,325 | 10-Apr-2026 |
Company Overview
Show Company Profile
Shriram Finance Limited, a non-banking finance company, provides financing services in India. It offers fixed and recurring deposits; commercial vehicle loans for commercial goods vehicles, passenger commercial vehicles, tractors and farm equipment, and construction equipment; two-wheeler, gold, used car loan, and personal loans; and green finance services. The company also provides business loans, such as MSME loans; working capital loans, including tyre, tax, fuel, toll financing, repair/top-up loans, fuel finance, challan discounting and vehicle insurance premium loans; motor insurance, including four-wheeler, two-wheeler, passenger and goods carrying vehicle insurance products; non motor insurance products, such as personal accident, shri criti care, and home insurance; and life insurance products comprising savings, retirement, child, protection plans, as well as recharges, including mobile recharge, mobile postpaid, landline postpaid, DTH, and FASTag recharge services. In addition, it offers utilities and bills services, such as electricity, LPG gas, gas bill payment, broadband postpaid, water, and cable tv; financial services and taxes comprising credit card, loan repayment, insurance, municipal services, and recurring deposit; and other services, such as housing society, clubs and associations, and education fees. It serves first time buyers, small road transport operators, commercial vehicles operators, micro, small, and medium enterprises (MSMEs), and individuals. The company was formerly known as Shriram Transport Finance Company Limited and changed its name to Shriram Finance Limited in November 2022. Shriram Finance Limited was incorporated in 1979 and is based in Mumbai, India.