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Nirmal Bang Report
Shriram Finance Ltd. remained in focus after domestic brokerage Nirmal Bang reiterated its Buy rating on the stock following a strong set of June quarter earnings. The brokerage maintained its target price of Rs 1,230, implying an upside potential of around 22% from the current market price of Rs 1,005.
Nirmal Bang said Shriram Finance's investment case is supported by three distinct engines of value creation. The first is a potential reduction in cost of funds over the next two to three years following the company's improved credit profile and benefits from the MUFG transaction. The second is the rapid expansion of its gold loan business through existing branches and dedicated kiosks. The third is a push into new commercial vehicle financing aimed at capturing market share and driving growth.
Shriram Finance Q1 Results Highlights
Shriram Finance's Q1 FY27 results beat street estimates of pre-provision operating profit and PAT by 9.2%/9.8% respectively. PAT grew by 59.79% YoY and net interet income was up 33.67%, with NIM expanding to 9.04% (from 8.11%) and cost-to-income improving to 25.48% (from 29.29%).
Assets under management grew 15.26% YoY and disbursements 19.51%, led by high-yield Gold (+45.78%) and Passenger Vehicles (+21.22%).
The brokerage continues to remain positive on Shriram Finance, on the back of strong benefits translating from the MUFG deal, rating upgrades which would lower cost of funds going ahead.
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