The Shriram Finance share price has had a tough start to the week, with its shares falling by nearly 9% in early trading today, April 28. In the early trading hours, the stock was trading at Rs 600.85, a significant dip after a challenging last five days during which it tumbled by almost 15%.
Why is the Shriram Finance stock struggling
Shriram Finance, one of the prominent players in the Non-Banking Financial Company (NBFC) sector, has had a rough ride on the stock market today. The sharp fall follows the company’s quarterly earnings announcement for Q4FY25. Despite a 13% year-on-year (YoY) growth in Net Interest Income (NII) and a nearly 10% YoY growth in Profit After Tax (PAT), the market’s reaction was not all positive. The company had a technical write-off in its NPAs, which led to concerns about asset quality and higher credit costs.
Brokerages remain bullish
However, most leading brokerages are still upbeat about the company’s long-term prospects, giving it a “Buy” rating. According to the reports, the company’s underlying fundamentals remain strong, and they see value in the stock at current levels.
Motilal Oswal on Shriram Finance: “Top Idea” in the NBFC Sector
Motilal Oswal remains positive on Shriram Finance, despite the recent fall in share price. The brokerage firm sees the company’s diversified asset under management (AUM) mix, improved access to liabilities, and enhanced cross-selling opportunities as key drivers for growth. The brokerage firm highlighted that Shriram Finance has yet to fully tap into its distribution network for non-vehicle products, which could lead to substantial growth in the future.
The brokerage firm has set a target price of Rs 790 for the stock, noting that its current valuation of 1.7x FY27E Price-to-Book Value (P/BV) is attractive. “We find its valuations of 1.7x FY27E P/BV attractive for a strong franchise that can deliver a ~17%/~19% AUM/PAT CAGR over FY25-27E,” the firm said. They also estimate a return on assets (RoA) of 3.3% and return on equity (RoE) of 17% in FY26.
Nuvama on Shriram Finance: Optimistic on long-term growth
The brokerage firm, Nuvama also maintains a “Buy” call on Shriram Finance, despite the quarter’s miss on credit cost and Net Interest Margins (NIM). The firm notes that while NIM fell by 23 basis points quarter-on-quarter (QoQ) due to higher liquidity, the company is guiding for NIM improvement to 8.5–8.6% in FY26.
In addition, they forecast a 15% growth in AUM for the upcoming year. The brokerage sees the company’s credit cost stabilizing and an improvement in the overall credit environment, which could fuel further growth.
Nuvama has raised its target price to Rs 760, up from Rs 720.
Nomura on Shriram Finance: Valuation still attractive
Another brokerage firm, Nomura, too, is positive on Shriram Finance, noting that while the company’s Q4 FY25 results were below expectations, the overall performance was decent. According to the brokerage house, the company’s AUM growth, despite being slightly lower than anticipated, still came in at a respectable 17% YoY. The brokerage also acknowledges that the company’s technical write-offs and the rise in credit costs were contributing factors to the drop in share prices.
Nonetheless, the brokerage house remains bullish, citing the company’s ability to grow in the coming years. “We find current valuations of 1.7x FY27F BVPS relatively reasonable,” the firm said. They have set a target price of Rs 700, implying a 1.8x FY27F P/BV.
Shriram Finance share performance
Looking at the stock performance of Shriram Finance over the past month, the share price of Shriram Finance has delivered a negative return of 7%. On a six-month basis, the stock has declined by 6.5%. However, on a yearly basis, the share price has seen a gain of 22%, and year-to-date (YTD), it has risen by 4.5%. The 52-week high for the stock stands at Rs 730.45 per share, while the 52-week low is Rs 438.60 per share. Currently, the company has a market capitalisation of Rs 1.15 lakh crore.