Shriram Finance Gets Rs 396.2 Bn Boost

Shriram Finance is set to receive a significant investment of Rs 396.2 billion from Japanese lender MUFG Bank through preference shares. This transaction will not only strengthen Shriram Finance’s capital base but also improve its balance sheet resilience, providing long-term growth capital to support expansion across various lending segments.

Key Highlights of the Investment

• The investment is valued at a post-money valuation of 1.8x P/B.
• The transaction is expected to boost Shriram Finance’s CRAR by approximately 15%.
• The company is on track for a potential rating upgrade.

Impact on Financial Performance

While the Return on Equity (RoE) is likely to be subdued at around 12% in FY28E, the Return on Assets (RoA) remains intact at 3.1%. The investment multiple is expected to remain unchanged at 2.2x Sep-27 P/ABV, with a revised target price of Rs 1,060.

Investment Outlook

Given the significant investment and the potential for long-term growth, the outlook for Shriram Finance remains positive. Investors should, however, conduct their own research and consider their individual financial goals and risk tolerance before making any investment decisions.

Remember, this is a perspective based on current information and not a prediction of future performance. It is essential to do your own research and consult with financial experts before making any investment decisions.