Shriram Finance Completes Sale Of Arm To Warburg Pincus Affiliate For Rs 3,929 Crore

Shriram Finance Ltd. the flagship company of the Shriram group, has completed the sale of its housing finance subsidiary to Warburg Pincus affiliate for Rs 3,929 crore. The company has sold 84.44% of the shareholding on a fully diluted basis.

"The sale of Shriram Finance's stake in Shriram Housing Finance is done to Warburg Pincus’ affiliate - Mango Crest Investment Ltd.," the company said through an exchange filing on Wednesday. The company also added that Shriram Housing Finance has contributed significantly to financial inclusions through its focus on the housing need of underserved segment.

"We are confident that the team will continue to drive success through financial inclusion and affordable housing for individuals. We look forward to seeing it scale to greater heights under the stewardship of Warburg Pincus," said Umesh Revankar, executive vice chairman of Shriram Finance.

In the quarter ended Sept. 30, Shriram Finance had reported an 18% year-on-year increase in total income to Rs 10,097 crore, compared to Rs 8,564 crore in the year-ago period. The company's net profit during the July-September period stood at Rs 2,153 crore, up 20.2% from Rs 1,792 crore in the same quarter of the last fiscal.

Shriram Finance shares rose as much as 2.55% during the day to Rs 3,267.60 apiece on the NSE. The stock closed 1.94% higher at Rs 3,248.25 per share. This compares with a 0.13% advance in the benchmark Nifty 50.

It has risen 58.54% year-to-date and 58.68% over the last 12 months.

Out of 41 analysts tracking the company, 39 maintain a 'buy' rating, one recommends a 'hold,' and one suggests 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 13.2%.

Jefferies, in a note dated Dec. 4, retained 'buy' rating on Shriram Finance Ltd., implying an upside of 17% for the stock price. It also highlighted that the stock stays among their top picks.

They supported their stance owing to a steady growth outlook for the company, along with asset quality which has held up well. The brokerage has set a price target of Rs 3,670 per share.