After Jefferies recommended a “Buy” recommendation on the shares with a target price of Rs 710 per share on February 25, Shriram Finance’s shares gained approximately 1%.
As of 11:50 a.m., the shares are trading at Rs 579.45, representing a gain of 0.39%.
Shriram Finance has seen a 20 percent fall in its stock performance from the recent peak on concerns over sluggish commercial vehicle (CV) sales and rising asset quality risks. The increase in freight rates since December has provided some support for the business.
A 17% compound annual growth rate (CAGR) in assets under management (AUM) is anticipated between FY25 and FY27, according to Jefferies, who is optimistic about the company’s growth prospects, particularly in the used passenger vehicle (PV) and non-auto segments. It is anticipated that this expansion will alleviate some of the strain caused by the weak CV market.
The quality of Shriram Finance’s assets has remained high, and the company’s gross non-performing assets (GNPA) are not expected to significantly rise. When compared to its rivals, the business has experienced fewer EPS downgrades in terms of earnings. Jefferies finds the shares to be attractively priced at 1.6 times FY26 book value, offering potential for long-term investment.
The company reported a net profit of Rs 2,080 crore for the quarter that ended in December 2024. This was an increase of 14.4% year-over-year, excluding a one-time gain from the quarter before. During the quarter, Shriram Finance’s net interest income (NII) increased by 14.3% to Rs 5,823 crore.