Shriram Finance, a non-banking finance company (NBFC), witnessed a significant 12.9% rise in its stock price, reaching an all-time high. ₹2,029.7 per share in Friday’s trading session, driven by the impressive performance of 2FY24.
NBFC reported consolidated net profit in its quarterly report published on Thursday. ₹1,792 crore, an increase of 13% compared to ₹1,578.56 crore in the 2nd quarter of FY23.
The company’s net interest income in the second quarter of 2024 was as follows: ₹4,969.39 crore, an increase of 18.80% on an annual basis, driven by strong credit growth, while the net interest margin increased to 8.9% in the second quarter of 2024, reflecting an annual increase of 67 basis points.
Total assets under management increased by 19.65% in the quarter ₹Compared to 202,640.96 crore ₹169,359.08 crore was reported in the 2nd quarter of FY23 and ₹193,214.67 crore in the first quarter of FY24.
Shriram Finance is a leading financial institution primarily focused on providing financing solutions for various sectors. The company specializes in offering financial services for commercial vehicles, passenger vehicles, construction equipment, agricultural equipment, micro, small and medium enterprises (MSMEs), two-wheelers as well as gold and personal loans.
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In response to the company’s excellent performance, domestic brokerage firms maintained their ‘buy’ ratings on the stock.
Centrum Broking: Maintains ‘Buy’ rating with Target Price ₹2,400
Brokerage firm Centrum Broking maintained its ‘buy’ rating on the stock and its target price remained unchanged. ₹2,400 each, which represents an increase of 22.5% from the current market price.
The brokerage firm highlighted that the growth in net interest margin (NIM) was driven by several factors, including a shift in product mix towards higher yielding offerings, reduction of excess liquidity and a slight decline in cost of funds (CoF). .
Motilal Oswal: Maintains ‘Buy’ call with target price ₹2,325
Motilal Oswal, another brokerage, believes Shriram Finance can maintain or even improve its net interest margin (NIM) trajectory while maintaining relatively manageable credit costs.
Shriram Finance is yet to fully maximize the potential of its distribution network for products such as MSME and gold loans, the brokerage said. He added that asset under management (AUM) growth for MSME, personal loans (PL) and gold loans is expected to remain strong as Shriram Finance continues to explore these opportunities in the coming year.
Shriram Finance emphasized that with its expanded geographical presence and larger workforce, it can create a strong foundation for sustainable growth by leveraging cross-selling opportunities to reach new customers and introduce new products.
Kotak Institutional Equities: Maintains ‘Buy’ call with Target Price ₹2,300
“Shriram continues to be our vehicle finance NBFC of choice, trading at a significant discount to its peers. It is gradually narrowing the gap to its peers in loan growth (Chola and MMFS by 27-40%) with widening margins (while others are suffering from loan growth) growing) changing product mix and increase in cost of funds and refinancing of low-yielding bonds),” Kotak said.
In addition, the brokerage firm pointed out that the company’s stressed loans, which improved shortly after the Covid-19 outbreak, not only maintained their stability but also showed continuous improvement.
“Shriram Finance reported one of the best quarters with loan growth of 20% after four years. High growth in SCUF’s business coupled with high passenger vehicle sales were key factors. Most NBFCs were slow to increase lending rates, but product mix “The change has put Shriram in a better position than its peers. This reflects the benefit of diversification due to the merger,” the brokerage said.
Disclaimer: The opinions and recommendations given in this article are those of individual analysts. They do not represent the views of Mint. We advise investors to consult certified experts before making any investment decisions.
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