Buy Shriram City Union Finance; target of Rs 2180: Motilal Oswal

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

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26 Aug, 2025 12:21

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Motilal Oswal's research report on Shriram City Union Finance

SCUF posted a 3QFY22 PAT of INR2.93b, up 5% YoY and 4% QoQ (12% beat). The beat on PAT was driven by lower credit costs, which were 9% below estimates (but up 8% QoQ/24% YoY) at INR2.2b. PPOP was largely in line at INR6.1b (up 8% YoY and 5% QoQ). 3QFY22 was characterized by a healthy ~23% YoY growth in disbursements with the company delivering record-high disbursements in 2W and personal loans. This led to AUM growing 13% YoY/6% QoQ to INR322.5b. GS3 increased 45bp QoQ to 7.3% as INR2.23b of additional loans were classified under Stage 3 because of the RBI circular. SCUF made provisions of INR976m on these loans (PCR: 44%) in 3QFY22. Access to liquidity has improved considerably for SCUF and it now appears on course to deliver a sustainable quarterly disbursement run-rate of INR70-80b. After two years of Balance Sheet consolidation, we now expect SCUF to deliver ~14%/~16% AUM/PAT CAGR during FY21-FY24. Adequate provision buffers insulate the Balance Sheet from any unforeseen contingencies on asset quality.

Outlook

We have made minor changes to our FY22/FY23 EPS estimates and expect SCUF to deliver an RoE/RoA of ~15%/3.2% in FY24. Maintain BUY with a TP of INR2,180 (premised on 1.3x Dec'23E BVPS), implying 22% potential upside.

More Info

At 17:30 Shriram City Union Finance was quoting at Rs 1,839.90, up Rs 63.45, or 3.57 percent.

It has touched an intraday high of Rs 1,859.60 and an intraday low of Rs 1,783.70.

It was trading with volumes of 2,614 shares, compared to its thirty day average of 2,493 shares, an increase of 4.84 percent.

In the previous trading session, the share closed down 0.33 percent or Rs 5.80 at Rs 1,776.45.

The share touched its 52-week high Rs 2,600.00 and 52-week low Rs 1,049.00 on 14 September, 2021 and 01 February, 2021, respectively.

Currently, it is trading 29.23 percent below its 52-week high and 75.4 percent above its 52-week low.

Market capitalisation stands at Rs 12,214.92 crore.

 For all recommendations report, click here

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