Shriram Finance jumps 7% on healthy Q2, brokerages share 'buy' calls, see up to 22% upside

Market weakness is likely to continue.

Shares of Shriram Finance soared 7 percent to Rs 3,309 apiece on October 28 after brokerages were impressed with its upbeat July-September quarter (Q2FY25) performance. Multiple 'buy' calls were issued as analysts expressed confidence on the company's steady performance, attractive valuations, and positive guidance for FY25.

HSBC maintained their 'buy' call on Shriram Finance and hiked target price to Rs 3,725 per share from Rs 3,600. Analysts said that Q2 reinforced view that Shriram is in its most convicing operating period since 2010. Delivery on all parameters was strong, guidance was reiterated and there were no misses in asset quality or growth, they added.

Nomura reiterated their 'buy' rating on Shriram Finance and shared target price of Rs 3,800. The brokerage firm stated that Shriram Finance is their top pick as it consistently delivered across metrics and found current valuations still relatively undemanding.

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Besides, Kotak Institutional Equities joined the bullish calls and shared a target price of Rs 3,700 per share. "Amid asset quality noise in the sector, the company continued to deliver a steady performance. Investment thesis of an overall growth trajectory of 20 percent is suggested. In light of risk in the sector, high growth in MSME, tractors remain some of the key monitorables," the firm added.

Shriram Finance reported net profit of Rs 2,071 crore in Q2FY25, up 18.3 percent YoY. The company's net interest income (NII) also increased by 16.3 percent YoY to Rs 5,606 crore in Q2FY25. The board has declared dividend of Rs 22 per share.

However, the company net interest margin (NIM) decreased to 8.74 percent in Q2FY25 versus 8.8 percent in the previous quarter. Meanwhile, its gross stage-3 assets grew to Rs 12,764 crore in Q2FY25 from Rs 12,408 crore in the previous quarter.

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