Shriram Finance Shares Extend Bullish Run To Hit Record High After Rs 40,000-Crore MUFG Deal
India's second-largest retail non-banking financial company has also received target price hikes by brokerages on the landmark MUFG deal.
Shares of leading non-banking financial company (NBFC) Shriram Finance extended their bullish run for the second straight session on Monday, Dec. 22 to hit a fresh record high after announcing the stake acquisition deal worth nearly Rs 40,000 crore by Japanese MUFG Bank on Friday.
Shriram Finance shares hit a lifetime high last week after the MUFG deal announcement. On Monday, the stock gained over 3% during the session to hit a consecutive record high of Rs 949.80, the highest level since its listing in 1997. This compared to a 0.61% rise in the NSE Nifty 50 index.
ALSO READ
'India Is Capital-Starved, PE Funds Must Invest In Banking System': Experts Decode Shriram-MUFG Deal
Why is Shriram Finance buzzing in trade?
Japan’s Mitsubishi UFJ Financial Group (MUFG) will invest Rs 39,718 crore or $4.5 billion for a 20% stake in Shriram Finance Ltd, marking the largest strategic investment by a foreign lender in India's NBFC sector. Japan's MUFG will acquire 47.1 crore shares at a floor price of Rs 840.93 per share.
The investment deal will be made through a preferential issuance of equity shares. Japan's MUFG will pay a one-time, non-recurring, non-compete and non-solicit fee of nearly $200 million to the Shriram Ownership Trust.
India's second-largest retail NBFC has also received target price hikes by several brokerages on the landmark MUFG deal. Nomura has maintained its 'buy' rating and raised its price target to Rs 1,140. Jefferies also raised its price target on Shriram Finance to Rs 1,080, while maintaining its 'buy' rating.
Shriram Finance Share Price Trend
The stock has risen 62.50% in the last 12 months and 60% on a year-to-date basis. The total traded volume so far in the day stood at 1.34 times its 30-day average. The relative strength index was at 50.40, as per NSE.
Since talks of the MUFG deal were first reported in early October, the non-bank lender's shares have jumped about 49%. The NBFC commands a market cap of Rs 1,75,869.73 crore. It is owned by the Shriram Group.
Out of 37 analysts tracking the company, 35 maintain a 'buy' rating, three recommend a 'hold,' and two suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target on the stock stands at Rs 938.25 indicating an upside of 2.2% from the current market price.
