 "Brokerages raise target on Shriram Finance post analyst call; details here")
Most brokerages have raised their target on Shriram Finance after the management guided with a strong growth outlook in the analyst call on December 30, 2025. The analyst call was in response to the announcement of the mega deal worth ₹39,620 crore with MUFG.
At 9:28 AM, Shriram Finance shares were trading 0.47 per cent higher at ₹983.75 per share. In comparison, BSE Sensex was up 0.21 per cent at 84,852.6.
Shriram Finance analyst call highlights:
- Management emphasised that MUFG is being onboarded as a long-term strategic partner, bringing not only significant capital support but also meaningful value addition through funding diversification, treasury and capital market expertise, and digital capabilities.
- The company highlighted that the proposed capital infusion will materially strengthen Shriram Finance’s balance sheet and is expected to accelerate asset under management (AUM) growth from the current 16-17 per cent to 18-20 per cent over the medium term.
- Management guided for a 100 basis points (bps) decline in cost of borrowing (CoB) over the next 2-3 years, driven by liability repricing, moderation in retail deposit rates, repricing of capital market borrowings, and credit rating upgrades.
- The company also indicated that retaining preferred customers would result in some improvement in overall asset quality and moderation in credit cost by 10-15 bps in the medium to long term. It also expects overall margin to see some improvement, led by cost of funds (CoF) moderation, while the increasing share of new vehicle financing and retention of good customers will have a limited impact.
Motilal Oswal Financial Services | Buy | Target raised to ₹1,180 from ₹1,100
The entry of MUFG as a strategic partner represents a transformative milestone for Shriram Finance, materially strengthening its capital base and enhancing its credit credibility, as highlighted by the brokerage. This strategic partnership not only de-risks the company’s growth trajectory but also expands its ability to serve a broader customer base across the commercial vehicles (CV), MSME, and retail segments, while reinforcing long-term franchise positioning.
Further, Shriram Finance has navigated recent asset-quality pressures better than most vehicle financiers, delivering stronger performance than peers. Net interest margins (NIMs) are expanding as excess liquidity normalises, and growth is set to accelerate, supported by goods and services tax (GST) rate cuts, a favourable monsoon, and easing inflation.
Despite strong stock performance (33 per cent in the past two months and 67 per cent since
Jan’25), Motilal Oswal sees a further upside as the company enters a phase of stronger execution and profitability.
“Valuations have re-rated from 1.5x to 2.9x FY26E P/BV, with room for additional expansion if growth and asset quality trends hold. At 2x FY27E P/BV (post money), valuations remain attractive for 26 per cent profit after tax (PAT) compound annual growth rate (CAGR) and return on asset/ return on equity (RoA/RoE) of 3.9 per cent/13.6 per cent by FY28E,” the brokerage said. ALSO READ | Why did The New India Assurance Company share price rises 2% in trade today?
Emkay Global Financial Services | Buy | Target hiked to ₹1,100 from ₹1,050
Factoring in the outlook and the management commentary, the brokerage has raised its FY27-28E AUM growth by 2-5 per cent and cut the CoF assumptions by 95 bps, resulting in a 5-8 per cent rise in EPS forecasts.
ICICI Securities | Buy | Target: ₹1,225
The brokerage believes Shriram Finance (SFL) can emerge as a leading NBFC over the next 5 years with structurally higher profitability. This will be on the backdrop of CoB to fall by 100 bps over the next 2–3 years, helped by MUFG deal (strong strategic partner), CARE rating upgrade and repo rate cut in Dec’25.Axis Direct | Buy | Target: ₹1,150
The brokerage views the MUFG transaction as a clear positive for Shriram Finance, as it validates the company’s business model and governance framework through the entry of a reputed global investor. Analysts believe strong rural demand and healthy growth visibility across key segments should support steady AUM growth over the medium term, while the capital infusion provides sufficient headroom to accelerate growth without compromising capital adequacy.
The MUFG deal is expected to progressively strengthen Shriram Finance's funding profile, with CARE already upgrading the rating to AAA and further upgrades anticipated from other agencies. The brokerage has revised its estimates in line with management commentary that the capital infusion is likely during the year. FY26 net interest income (NII) and earnings estimates have been raised by approximately 3 per cent and 7 per cent, respectively. With management now guiding for AUM growth of about 19 per cent CAGR over FY26–28E, FY27–28E NII and earnings estimates have also been increased by 3–4 per cent and 9–10 per cent, respectively, factoring in a better margin profile and lower credit costs.
Meanwhile, according to reports, Nomura has retained its ‘Buy’ while raising the target to ₹1,200 per share from ₹1,140. The brokerage expects 3.9 per cent RoA FY28F to moderate to 3.7 per cent over next five years. It expects the vehicle and non-vehicle mix to remain around 80 per cent:20 per cent and sees faster growth in gold lending in the near term. Similarly, Jefferies has increased its target to ₹1,145 from ₹1,060, retaining 'Buy'. The brokerage also hiked its earnings per share (EPS) estimate for fiscal year 2027-28 by 5-7 per cent. It expects RoE of 14.2 per cent for financial year 2028. Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.