Buy Shriram Finance; target of Rs 1700 : Motilal Oswal

Motilal Oswal is bullish on Shriram Finance recommended buy rating on the stock with a target price of Rs 1700 in its research report dated April 28, 2023.

Broker Research

April 28, 2023 / 22:54 IST

Buy

26 Aug, 2025 12:21

Volume

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Motilal Oswal's research report on Shriram Finance

Shriram Finance’s (SHFL) 4QFY23 PAT declined 6% YoY/26% QoQ to ~INR13.1b (29% miss). This included impairments of ~INR3b on intangible assets and a one-time credit cost of ~INR2.95b due to stress testing of the entire loan portfolio. NII grew 20% YoY to INR41.8b. Reported NIM was stable sequentially at 8.55%. However, NIM (calc.) contracted ~45bp QoQ because of two fewer calendar days in 4QFY23 and higher concentration of loan bookings in the latter half of Mar’23. SHFL’s customer and product propositions help it to operate in a benign competitive landscape and give it the pricing power to pass on its higher cost of borrowings to customers on new loans disbursed. We estimate NIM compression of ~20bp in FY24, including the positive impact of ~INR2.5b on NII because of fair valuation under merger accounting.

Outlook

We believe the merged entity isstronger than the respective standalone businesses, due to better cross-selling abilities and benefits on the liability side. Reiterate our BUY rating with a TP of INR1,700 (based on 1.2x FY25E BVPS).

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