Buy Shriram City Union Finance; target of Rs 2420: Axis Direct

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26 Aug, 2025 12:21

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Axis Direct's research report on Shriram City Union Finance

SCUF reported a weak Q4FY17 marked by sharp deterioration in asset quality and decline in margin, resulting in a significantly lower PAT (Rs 120 mn; down 78% YoY). Headline asset quality deteriorated (224 bps QoQ), as SCUF transitioned to 120dpd GNPA recognition (150dpd earlier).

Outlook

We cut our FY18PAT estimate by 15% to factor in the underperformance. SCUF remains a well-capitalized, high-RoA business, albeit with some near-term concerns on growth and asset quality. We roll forward our multiples to FY19 to arrive at a TP of Rs 2,420 (2.9x FY19E P/ABV).At CMP of Rs 2,182, SCUF trades at 3.1x/2.6x FY18E/19E P/ABV, implying an 11% upside.

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