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Shriram Finance Limited (SHRIRAMFIN) Comprehensive Financial Analysis reports | Scrolls

by KarNivesh | 06 August, 2025


Executive Summary

Shriram Finance Limited is India’s largest retail Non-Banking Financial Company (NBFC) with a market capitalization of ₹1,18,622 crores. Its portfolio spans commercial vehicle finance, consumer loans, and MSME lending. The company emerged as a financial powerhouse after the merger of Shriram Transport Finance, Shriram City Union Finance, and Shriram Capital in November 2022, unlocking strong fundamentals and growth potential.


Company Overview and Recent Developments

Shriram Finance represents the consolidation of three Shriram Group entities into a unified NBFC. Operating through 3,225 branches and 79,186 employees, the company serves 9.71 million customers across India, including urban and rural markets.

Key developments include:

  • May 2024: Sale of Shriram Housing Finance to Warburg Pincus for ₹4,630 crores.

  • Dec 2024: Raised ₹11,397 crore multicurrency loan to finance credit growth.

  • Mar 2025: Raised ₹2,686.35 crore via External Commercial Borrowings to diversify funding.


Financial Performance Analysis

Revenue and Profitability

  • Revenue: ₹19,288 crores in FY2022 → ₹41,124 crores in FY2025 (CAGR 28%).

  • Net Income: ₹2,721 crores → ₹9,554 crores in FY2025.

  • Net Income Margin: 23.23% in FY2025.


Earnings and Returns

  • EPS: ₹20.44 → ₹50.82 (FY2022–FY2025).

  • ROE: 17.90% (FY2025).

  • ROCE: 11.60% (FY2025).


Q1 FY2026

  • Net Profit: ₹2,155.73 crores (+8.84% YoY).

  • Revenue: ₹11,535.63 crores (+20.10% YoY).

  • Net Interest Income: ₹6,026.43 crores (+13% YoY).


Valuation and Asset Quality

  • P/E Ratio: 12.36 (vs industry 20.66).

  • P/B Ratio: 2.10 (vs industry 4.01).

  • Gross NPA: 4.55% in FY2025 (down from 5.45%).

  • Net NPA: ~3.2%.

  • Debt-to-Equity: 3.15.

  • Capital Adequacy: 20.3% (Mar 2024).


Shareholding Pattern (June 2025)

  • Promoters: 25.4% (no pledged shares).

  • FIIs: 52.6%.

  • DIIs: 16.3% (Mutual Funds 10.52%).

  • Retail: 5.6%.


Peer Comparison and Market Positioning

  • Valuation: Trades at a discount vs Bajaj Finance (P/E 20.0) and Cholamandalam (P/E 27.8).

  • P/B of 2.10: Lowest among peers.

  • ROE: 17.90%, improving toward 18%.

  • Market Cap: ₹1,18,622 crores (6th largest NBFC).


Business Model and Growth Prospects

  • Segments:

    • Commercial Vehicle Finance: 45.5% of AUM.

    • Passenger Vehicle Finance: 20%.

    • MSME Finance: 14%.

  • Rural Penetration: 80% branches in semi-urban/rural India.

  • Digital Transformation: Hybrid model with mobile platforms and automated systems.

  • Market Leadership: Largest in used commercial vehicle and two-wheeler financing.


Risk Assessment

  • Credit Risk: Exposure to cyclical commercial vehicle financing.

  • Regulatory: RBI scrutiny and higher risk weights on consumer lending.

  • Funding Risk: 31% YoY surge in financing costs in Q4 FY2025.

  • Competition: Banks and fintechs intensifying retail lending.


Future Growth Catalysts

  • Commercial vehicle upcycle supported by infrastructure spending.

  • Post-merger synergies in branch networks and cross-selling.

  • Rural market expansion with government initiatives.

  • MSME lending opportunity in ₹50 lakh crore sector gap.


Analyst Outlook and Investment Takeaways

  • Analysts maintain “Buy” ratings with target prices ₹578–₹850 (avg ₹700–₹750).

  • Stock shows volatility (beta 1.68) but strong long-term fundamentals.

  • High FII holding reflects global investor confidence.


Investment Thesis

Shriram Finance offers attractive valuation, market leadership, and growth in underserved markets. Suitable for medium-to-high risk investors with a 3–5 year horizon, combining potential capital appreciation with stable dividends (yield 1.57%).

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