Shriram Finance's business prospects remain healthy, pressure on NIM seen

Valuation targets, though, are close to current price; potential selling by large non-promoter shareholders also an overhang

Investors have see-sawed in their opinion of the merger of Shriram City Union Finance (SCUF) and Shriram Capital (SCL) into Shriram Transport Finance. The merged entity Shriram Finance has assets under management (AUM) up by 27 per cent with a more diversified portfolio. The equity base expands, and analysts believe AUM should grow at 15 per cent between FY23 to FY25 but there may be NIM (net interest margin) pressure. The CAGR in EPS (earnings per share) could be lower, estimated at 13 per cent over the same period. The higher free float could lead to more selling, putting a