Buy Shriram Finance; target of Rs 4000: Motilal Oswal

Motilal Oswal is bullish on Shriram Finance has recommended buy rating on the stock with a target price of Rs 4000 in its research report dated October 27, 2024.

Broker Research

October 28, 2024 / 20:41 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Shriram Finance

Shriram Finance (SHFL)’s 2QFY25 PAT rose ~18% YoY to ~INR20.7b (in line), and PPoP grew 14% YoY to ~INR39.8b (in line). NII grew ~19% YoY to INR54.6b (in line), while reported NIM dipped ~5bp QoQ to ~8.75%. 1HFY25 PAT grew ~18% YoY to INR40.5b and we expect 2HFY25 PAT to grow by ~15% YoY Credit costs of ~INR12.3b (10% lower than MOFSLe) translated into annualized credit costs of ~2.1% (PQ: 2.1% and PY: 2.3%). Management guided that NIM can be maintained at the current levels or there can be a slight improvement. We model NIMs of 9.1%/9.4% in FY25/FY26.

Outlook

SHFL is effectively leveraging cross-selling opportunities to reach new customers and introduce new products, leading to improved operating metrics and a solid foundation for sustainable growth. The current valuation of ~1.8x FY26E BVPS is attractive for a ~19% PAT CAGR over FY24-27E and RoA/RoE of ~3.3%/18% in FY27E. Reiterate BUY with a TP of INR4,000 (based on 2.2x Sep’26E BVPS).

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