Buy Shriram Finance; target of Rs 1100: Motilal Oswal

Motilal Oswal is bullish on Shriram Finance recommended buy rating on the stock with a target price of Rs 1100 in its research report dated December 22, 2025.

Broker Research

December 22, 2025 / 11:52 IST

Buy

Motilal Oswal's research report on Shriram Finance

The Board of Shriram Finance (SHFL) has approved a preferential equity issuance of INR396.2b to MUFG Bank Ltd., a leading Japan-based financial institution, at an issue price of INR840.93 per share. Upon completion, MUFG will hold ~20% stake in the company on a fully diluted basis and will be classified as a public shareholder. We view this transaction as a strategically significant and value-accretive development for SHFL. MUFG’s investment is expected to support the company’s next phase of growth by providing long-term capital to accelerate expansion across core segments, including CV and MSME lending, while strengthening balance sheet resilience through enhanced creditworthiness and funding capacity. Over time, this could culminate in a potential credit rating upgrade to AAA for SHFL. SHFL continues to deliver sector-leading performance, driven by broadbased loan growth, a diversified product mix, and disciplined risk management. Over the past 6-9 months, the franchise has outperformed peers, supported by sustained demand in the used-vehicle segment and resilience across its core customer base.

Outlook

We expect SHFL to deliver a PAT CAGR of ~25% over FY25-28E and an RoA/RoE of 3.8%/13.2% by FY27. Reiterate our BUY rating on the stock with a TP of INR1,100 based on 2x Mar’28E P/BV.

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