Buy Shriram Finance; target of Rs 2250: ICICI Direct

ICICI Direct's research report on Shriram Finance

Shriram Finance (SHF) is large financier with a strong rural presence engaged in credit solution for commercial vehicles, two wheeler, car loans, home loans, gold loans and small business. As of 31 March 2023, SHF has a huge presence with 2922 branches across India and employee count of 64052, customer base of ~73 lakhs • In November 2022, Shriram group entities - Shriram Transport Finance, Shriram City Union Finance & Shriram Capital merged to form Shriram Finance resulting in one of the largest NBFCs with AUM of Rs 185683 crore.

Outlook

Thus, we assign BUY rating on PHF, in anticipation of reduction in valuation gap with peers. • We value PHF at ~1.7x FY25E standalone ABV and assign a ~2x multiple on FY25E ABV with a 20% holding discount. Thus we arrive at a target of price of Rs 2250/share

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