Buy Shriram Finance; target of Rs 1100: Emkay Global Financial

Emkay Global Financial is bullish on Shriram Finance has recommended buy rating on the stock with a target price of Rs 1100 in its research report dated December 30, 2025.

Broker Research

December 31, 2025 / 11:14 IST

Buy

Emkay Global Financial' research report on Shriram Finance

SHFL hosted an analyst call to highlight its strategy for growth and utilization of the funds as a consequence of its announcement of the mega deal of Rs396.2bn with MUFG. The deal is expected to close by end-FY26, subject to regulatory approvals. In terms of its medium-to-long term strategy, the management indicated that it would see CoF moderating by ~100bps over the next 2 years (matching that of other AAA-rated NBFC peers), which would result in SHFL focusing on retaining preferred customers (who would otherwise typically move out due to higher rates) and an increase in share of new vehicle financing. This would also improve AUM growth to ~20% (from ~15-16% earlier), supported by the CoF benefit and expansion in non-South regions. The management also indicated that retaining preferred customers would result in some improvement in overall asset quality and moderation in credit cost by ~10-15bps in the medium to long term. The management also expects overall margin to see some improvement, led by COF moderation, while increasing share of new vehicle financing and retention of good customers will have limited impact.

Outlook

Factoring in the outlook and the management commentary, we raise our FY27-28E AUM growth by ~2-5% and cut our CoF assumptions by ~95bps, resulting in a ~5-8% rise in our EPS forecasts. We maintain BUY and lift our target price by 5% to Rs1,100, implying a FY27E P/B of 2.2x.

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