Shriram Finance shares rise 2% after Q1; should you buy, sell or hold?

HSBC remains positive on Shriram Finance with a ‘Buy’ rating and a target price of Rs 730. This implies an upside potential of nearly 20 percent from the last close. The brokerage acknowledged the rise in gross Stage‑2 loans—up 6–9 percent quarter-on-quarter for consecutive quarters—but noted that the management has maintained its credit cost guidance. While AUM growth remains on track, HSBC pointed out that higher liquidity is exerting pressure on net interest margins, estimating a 30–35 basis point drag. It cut EPS estimates for FY26–27 by 2–4 percent but maintained its positive stance, citing recovery prospects in the second half of FY26.

Jefferies has also maintained a ‘Buy’ rating on Shriram Finance, with a target price of Rs 800. The brokerage highlighted a 17 percent year-on-year AUM growth, which was in line with expectations. NIMs improved sequentially but fell slightly short of estimates due to liquidity-related drag. On the asset quality front, gross Stage 3 loans declined quarter-on-quarter, and credit costs came in better than expected. Stage 2 and 3 assets together rose slightly to 11.8 percent from 11.4 percent. Jefferies expects a 16 percent AUM CAGR, NIM improvement, 19 percent EPS CAGR, and 16 percent ROE over FY25–28.

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Motilal Oswal has reiterated a ‘Buy’ rating on Shriram Finance with a target price of Rs 780, calling it their Top Idea in the NBFC space. The brokerage noted that demand in rural and semi-urban regions remains strong, with segments like used commercial vehicles (CVs) and MSME lending showing resilience and no major stress. Shriram Finance is well-positioned to capitalise on its diversified AUM mix, improved liability access, and growing cross-selling opportunities. Motilal also highlighted that the company is yet to fully tap into its wide distribution network for non-vehicle products, presenting further growth potential.

Nuvama has maintained a ‘Buy’ rating on Shriram Finance with a target price of Rs 710, citing an improved performance in the June quarter following a muted Q4FY25.  NIM is expected to improve to 8.5 percent by Q4FY26, supported by the normalisation of excess liquidity and easing deposit rates. The company has guided for a return on assets (RoA) of over 3 percent for FY26, with credit costs expected to hover around 2 percent of total assets.

Shriram Finance shares have declined by nearly 10 percent over the past month.

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