Buy Shriram Finance, target price Rs 3,825: Axis Securities

Axis Securities has initiated a coverage with a buy call on Shriram Finance with a target price of Rs 3825. The current market price of Shriram Finance is Rs 2938.4 . Shriram Finance, incorporated in 1979, is a Large Cap company with a market cap of Rs 109946.78 crore, operating in NBFC sector.

Shriram Finance's key products/revenue segments include Interest, Other Operating Revenue, Fees & Commission Income, Income From Financial Services, Income From Sale Of Share & Securities, Dividend and Rental Income for the year ending 31-Mar-2024.

Financials

For the quarter ended 30-09-2024, the company has reported a Consolidated Total Income of Rs 10096.68 crore, up 5.07 % from last quarter Total Income of Rs 9609.71 crore and up 13.54 % from last year same quarter Total Income of Rs 8892.99 crore. The company has reported net profit after tax of Rs 2149.89 Crore in latest quarter.

The company's top management includes Mr.Jugal Kishore Mohapatra, Mr.Gokul Dixit, Mr.S Ravindran, Mr.Pradeep Kumar Panja, Mr.S Sridhar, Mrs.Maya Sinha, Mr.D V Ravi, Mr.Ignatius Michael Viljoen, Mr.Parag Sharma, Mr.Y S Chakravarti, Mr.Umesh Revankar, Mrs.M V Bhanumathi. Company has Haribhakti & Co. LLP as its auditors. As on 30-09-2024, the company has a total of 38 Crore shares outstanding.

Investment Rationale
Axis Securities has initiated a coverage on Shriram Finance (SFL) with a BUY recommendation. This is supported by a) Potential to improve market share in the used-CV segment, b) Reduced cyclicity with lower dependence on the CV portfolio, c) Diversification of portfolio ensuring healthy AUM growth, d) Steady Asset Quality with lower mix of unsecured loans and e) Potential to deliver healthy return ratios. The brokerage values the stock at 2.2x FY27E ABV (vs. its current valuations of 1.7x FY27E ABV) and arrive at a target price of Rs 3,825/share, implying an upside of 30% from the CMP.