Shriram Finance
Used-CV leader with MUFG as partner
- Last close
- ₹971.50
- 29 Sept 2026 · reference
- 1D · 1M
- −0.5% · −10.6%
- price-only
- Weight
- 3.5%
- 31 Jul 2026 · Aug rank 6
- Thesis review
- 8 Sep 2026
- Why We Own, p39
Approved description
Shriram Finance is India's largest retail asset-financing NBFC (formed by the 2022 merger of Shriram Transport Finance, Shriram City Union Finance and Shriram Capital), with Rs 3.14 lakh crore AUM as of Jun-2026. Commercial vehicle finance (mostly used CVs) is ~47% of AUM (Rs 1.47 lakh cr), with passenger vehicles (Rs 68,650 cr), MSME (Rs 41,962 cr), two-wheelers, gold (Rs 7,514 cr) and personal loans making up the rest. It funds itself through NCDs, bank lines, ECBs and Rs 72,070 cr of public deposits.
- 01Capital-led re-rating: MUFG's Rs 39,618 cr infusion (20% stake at Rs 840.93) lifted CRAR to 34.17% and cut debt/equity to 2.14x; NIM already expanded 93 bps YoY to 9.04% in Q1FY27 and brokers expect ~100 bps lower funding cost over 2-3 years.
- 02Earnings inflection: Q1FY27 PAT +59.8% YoY to Rs 3,453 cr with NII +33.7% and cost-to-income down to 25.5% from 29.3%; MOFSL models 26% PAT CAGR FY26-28 on 17% AUM CAGR.
- 03Scale and diversification: Rs 3.14 lakh cr AUM growing 15.3% YoY (management guides 15-18% for FY27) with CV +19.4%, PV +21.2%, gold +45.8%; deposits of Rs 72,070 cr (+14.3%) give a retail liability base most NBFC peers lack.
- 04Valuation gap to peers: 2.96x P/B / 21.6x TTM P/E vs Chola at 5.09x / 27.0x and Sundaram at 3.51x / 23.0x, despite comparable 16% ROE and a 32% 5-year profit CAGR.
- 05Asset quality holding: GS3 4.64% / NS3 2.33% stable QoQ with PCR 50.3%; credit cost ran ~1.8% in 9MFY26 vs 3.2% in FY22 (Antique) and management guides below 2%.
Reference close, with results-period markers
- 1Q Sep-25 end · 30 Sept 2025
- 2Q Dec-25 end · 31 Dec 2025
- 3Q Mar-26 end · 31 Mar 2026
- 4Q Jun-26 end · 30 Jun 2026
Quality score, technicals and Buoyant Score
Computing the scorecard…
Latest quarter · Q Jun-26
| Line (₹ cr) | Q Jun-26 | YoY | QoQ |
|---|---|---|---|
| Net Profit | 3,453 | +59.9% | +14.3% |
Reported vs internal estimate: internal quarterly estimates are not in the supplied package; consensus feed not licensed. YoY/QoQ per PRD §12.5 (transitions, not %, on non-positive bases).
Position and valuation context
NBFC preset: AUM/loan growth, spreads, asset quality, leverage, ROA/ROE; P/B and P/E.
Sell-side targets are third-party views, not Buoyant's; the upside is recomputed on our reference close, so it differs from the figure printed at the broker's price date.
Valuation range
No headline target on this page; the book quotes the thesis and the risk rather than a target.
What we watch
- Q2FY27 results (late Oct-2026): first full quarter of MUFG capital plus monsoon-season asset-quality read…
- Funding-cost pass-through: incremental cost of funds 7.77% vs 8.56% stock cost; each 25 bps of rate cuts / credit-rating benefit from MUFG flows to NIM through FY27.
- Final RBI revolving-credit rules (post 28-Aug-2026 consultation) could redirect flows toward secured vehicle/gold lenders like Shriram.
- ROE dilution: 25% more shares post-MUFG means ROE mechanically falls (brokers model 13-14% by FY28 vs 16.4% in FY26) unless AUM growth accelerates to 18-20%; promoter holding fell to 20.3%.
- Asset quality is weather/rural-cycle sensitive: management flagged a 'cautious outlook pending Q2 data due to weather impacts'; GS3 ticked up 6 bps QoQ to 4.64% and PCR is only ~50%.
- NIM at 9.04% is above the 8.5% medium-term level management itself guides to; part of Q1's 60% PAT growth is one-time leverage from undeployed equity.