Shriram Finance is targeting a faster growth pace and better profitability, signaling potential upside for investors.
Growth Outlook
The company plans to push its growth rate to about 18‑20% a year. It will do this by:
- Adding more vehicle‑finance customers while keeping the existing ones with stronger credit profiles.
- Expanding gold‑loan and small‑business (SME) lending.
Analysts expect this to translate into an average compound annual growth rate (CAGR) of roughly 18% from FY25 to FY28.
Cost of Funds and Net Interest Margin
Credit rating agency CARE upgraded Shriram Finance to AAA (Stable). A higher rating usually means cheaper borrowing costs. The firm is likely to see about a 50‑basis‑point drop in its overall cost of funds, which should lift the net interest margin (NIM) to around 9.8% by FY28.
Financial Estimates
- Revenue forecasts for FY27 and FY28 are lifted by 4% and 7% respectively.
- Return on assets (RoA) is projected to reach 3.2% by FY28.
- The valuation multiple is adjusted to 2.3 times book value, with the price target set at ₹1,150 per share.
Investment Recommendation
Given the stronger growth outlook, improved margins, and lower funding costs, analysts maintain a “Buy” call on Shriram Finance.
Bottom Line
Higher growth, a AAA rating upgrade, and an expected rise in NIM make Shriram Finance an attractive prospect for retail investors. As always, do your own research before making any investment decisions.