Shriram Finance soars 10% despite block deal, Piramal Enterprises likely seller

Earlier this week, TPG Investment also offloaded its entire stake in Shriram Finance.

Shares of Shriram Finance surged 10 percent in early trade on June 21 and hit a 52-week high of Rs 1,715.60 despite a block deal on the exchanges.

Around 3.2 crore shares, or a 8.3 percent stake, in the company changed hands on the exchanges at an average price of Rs 1,545, a one percent discount to the previous day's closing price of Rs 1,559.65 on the National Stock Exchange.

The total deal value stood at Rs 4,944 crore. Though Moneycontrol could not immediately identify the sellers or the buyers, CNBC-Awaaz reported a day earlier that Piramal Enterprises was looking to sell its entire stake in Shriram Finance.

Investment management firm Morgan Stanley was the sole broker for the block deal, CNBC-Awaaz added.

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The stake sale marks Piramal's exit from the non-banking finance lender. Piramal Enterprises held an 8.34 percent stake in Shriram Finance as per the company's shareholding data on BSE on March 31, 2023. The news of the stake sale also triggered a spike in the shares of Piramal Enterprises.

At 09.16 am, shares of Shriram Finance  and Piramal Enterprises were both locked in the 10 percent upper circuit at Rs 1,715.60 and Rs 922.35, respectively, on the NSE.

Piramal's exit comes just a couple of days after private equity firm TPG offloaded its entire 2.65 percent stake in the shadow bank for Rs 1,390 crore through open market transactions.

Institutional buyers such as ICICI Prudential Life Insurance Company, Norges Bank, Societe Generale ODI, Nippon India Mutual Fund, Aditya Birla Sun Life MF, Kotak Mahindra Life Insurance Company and Morgan Stanley Asia Singapore were among those who picked up TPG’s stake.

Recently, the management of Shriram Finance has given a strong growth outlook for the company which may be the reason why the stock did not react negatively to the large deals.

During a recent interview with CNBC-TV18, YS Chakravarti, the Managing Director and CEO of Shriram Finance, shared an optimistic perspective on the two-wheeler and farm equipment segments. Chakravarti predicted a strong growth rate of 10-12 percent for the two-wheeler sector, while the farm equipment sector is expected to experience a growth rate of 10-15 percent.

Taking into account the influence of pent-up demand, Chakravarti acknowledged, "We have observed a substantial amount of pent-up demand. Nevertheless, we anticipate a steady growth rate of 10-12 percent in the future. This projection is dependent on the government's dedication to infrastructure projects, which we anticipate will generate additional sales. However, irrespective of external factors, we are confident that this 10 percent growth rate will be sustained throughout the year."

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