Motilal Oswal's research report on Shriram Finance
The last quarter of FY25 was a mixed bag for Shriram Finance (SHFL) as its AUM growth and disbursement momentum were healthy but its asset quality exhibited minor deterioration over the previous two quarters. The weakness stemmed from a slowdown in demand amid muted government capex and weak cashflows in the hands of customers. Additionally, SHFL reported margin compression, primarily driven by surplus liquidity on the balance sheet from the large ECB issuances during Dec’24-Mar’25.
Outlook
SHFL’s valuations have already re-rated from 1.4x to 1.9x 1-year forward P/BV over the last 12 months. The stock can see a further re-rating if the company is able to sustain the execution on its AUM growth, improve margins and exhibit stability in its asset quality. Reiterate our BUY rating on the stock with a TP of INR800, based on 2x FY27E P/BV.
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