Shriram Finance Ltd. share price target

We maintain our BUY recommendation on the stock

Shriram Finance’s (Shriram) Q4FY25 financial performance was subdued with a sharp NIM contraction and a spike in credit cost. While headline asset quality improved with GNPL falling to 4.55% vs. 5.38% QoQ, this was driven by higher write-offs at >INR 20bn during Q4FY25.

SHFL’s Q4FY25 results were mixed – credit cost was elevated causing a PBT miss, which was offset by lower tax rate that led to in-line PAT.

We maintain our BUY recommendation on the stock

Shriram Finance (SHFL)’s PAT in 3QFY25 rose ~14% YoY to ~INR20.8b. Post-tax gain on the sale of Shriram Housing was ~INR14.9b. Reported PAT (including exceptional gain) stood at INR35.7b.

Shriram Finance (SHFL) offers a well-diversified product suite and has emerged as a strong player across all its product segments. It has demonstrated strong execution capabilities and asset quality resilience while navigating multiple credit and economic cycles.

We initiate coverage on Shriram Finance Ltd (SFL) with a BUY recommendation and a target price of Rs 3,825/share, implying an upside of 30% from the CMP.

Shriram Finance (SHFL)’s 2QFY25 PAT rose ~18% YoY to ~INR20.7b (in line), and PPoP grew 14% YoY to ~INR39.8b (in line). NII grew ~19% YoY to INR54.6b (in line), while reported NIM dipped ~5bp QoQ to ~8.75%.1HFY25 PAT grew ~18% YoY to INR40.5b and we expect 2HFY25 PAT to grow by ~15% YoY

Shriram Finance, sustaining >20% YoY AUM growth in Q1FY25 and improving trajectory in RoE (now settling at >16%) for straight five quarters, is the evidence of STFC-SCUF’s successful merger and management’s superior execution.

Shriram Finance, reported over 16% RoE in Q4FY24, is the evidence of STFC-SCUF’s successful merger that led to one of the largest distribution networks in the industry with >3,000 branches serving around 8mn customers through a wide array of product offerings.

Shriram Finance’s (SHFL) 4QFY24 PAT grew ~49% YoY to ~INR19.5b (in
line) and PPoP grew 27% YoY to ~INR39.1b (in line). FY24 PAT grew ~20%
YoY to ~INR71.9b. YoY numbers may not be comparable because of a few
one-off items in 4QFY23.