Shriram Finance Outshines Market with 5% Rally After Outlook Upgrade and Growth Strategy
Business and Industry Overview:
Shriram Finance Ltd is a big finance company in India. It is part of the Shriram Group. The group started in 1974 in Chennai. First, it worked with chit funds. Then, it started giving loans and insurance. In 2022, three companies joined to make Shriram Finance. These were Shriram City Union Finance, Shriram Capital, and Shriram Transport Finance. Shriram Finance gives many types of loans. It gives loans for trucks, buses, cars, and two-wheelers. It gives gold loans and loans to small businesses. Many people in small towns and villages cannot get loans from big banks. Shriram Finance helps these people. It easily gives loans. The Shriram Group also works in insurance. Shriram Life Insurance gives life insurance. Shriram General Insurance gives insurance for cars, homes, and travel. The group helps people invest money. Shriram AMC manages mutual funds. Shriram Insight helps people buy and sell shares. Shriram Wealth gives advice on saving and using money. The group also builds houses. Shriram Properties builds homes, mostly in South India. Shriram Automall is a place where people can buy and sell used vehicles. The Shriram Group helps common people and small business owners. It gives loans, insurance, and other services in cities and villages. It makes money matters easy for people who cannot go to big banks.
Latest Stock News:
On April 8, 2025, Shriram Finance’s share price went up by 5% to ₹648.45. This happened during the day on the BSE stock exchange. The share price increased because of a stable outlook and strong buying by investors. The stock had fallen by 6% in the last three trading days. But now it has recovered most of that loss. It was the top gainer in the Nifty Financial Services index on that day. This index went up by 1.6%. The Nifty 50 index also went up by 1.62%. Shriram Finance has done better than the market recently. In the last week, the stock increased by 1%. At the same time, the Nifty 50 fell by 3.3%. In the last three months, Shriram Finance gained 11%. The Nifty 50 fell by 5.4% in the same time. Shriram Finance is part of the Shriram Group. It is the main company of the group. The company works in many areas like consumer finance, life insurance, general insurance, stock broking, and distribution. It is one of the biggest non-banking finance companies (NBFCs) in India. Its total assets under management (AUM) are more than ₹2.54 trillion.
On March 18, 2025, S&P Global Ratings gave a better credit rating to Shriram Finance. The rating went up from ‘BB/B’ to ‘BB+/B’. S&P said the company will benefit from stronger rules in India for NBFCs. It also said that Shriram Finance has a good financial position. S&P said the company is a leader in used commercial vehicle loans. This is because of strong relationships with customers, a deep knowledge of the market, and a wide reach in rural areas. Shriram Finance works in risky areas. Its customers often have low income and no fixed cash flow. Because of this, the company’s credit cost and bad loans are higher than some other companies. But India’s growing economy will help the company. S&P said that credit cost may improve a little. It may go down from 2.1% to 1.9% of average loans in the next few years.
The company’s loan growth is expected to be strong. It may grow 17% to 19% over the next two years. But its capital will still be strong. S&P said the risk-adjusted capital (RAC) ratio will stay between 13.5% and 14%. Shriram Finance is not growing too fast in any one segment. It is growing steadily in all areas. It is also reducing its focus on commercial vehicle loans. This will lower the risk.
Shriram Finance has also applied to the Reserve Bank of India (RBI) for a primary dealership license. If approved, this will let the company buy and sell government bonds. Very few NBFCs in India have this license. Also, the RBI has allowed Shriram Finance to buy 100% of Shriram Overseas Investments Private Limited. This may help the company in its plans. The company wants to double its AUM in the next five years. It will focus more on cross-selling and growing in rural and semi-urban areas. Analysts also feel positive about the company. They like its strong portfolio, good loan quality, and ability to give good returns.
Potentials:
Shriram Finance has many simple goals for the future. It wants to grow fast and help more people. In December 2024, it started a new part called Shriram Green Finance. This gives loans for electric vehicles, battery stations, and clean energy machines. The company wants to grow this green loan business to ₹5,000 crore in 3 to 4 years. First, it will focus on states like Karnataka, Kerala, NCR, and Maharashtra. Shriram Finance also wants to help more small businesses. These are called MSMEs. Right now, it gives ₹19,600 crore in loans to them. It plans to grow this to ₹40,000 crore in 3 years. It will do this by opening more branches in North, Central, and East India. The company wants to grow its total loans (called AUM) by 15% every year. It will do this by giving more loans for vehicles, tractors, and small businesses. In May 2024, it sold its housing loan company for $555 million. Now it will focus more on giving loans to people and small businesses. Shriram Finance also wants its total assets to grow to ₹3 lakh crore by 2025–2026. It is using more digital tools so people can apply for loans online. This saves time. It also plans to work with other companies to reach more people, even in villages. In short, Shriram Finance wants to help the environment, support small businesses, grow fast, and use technology to serve people better.
Analyst Insights:
- Market capitalisation: ₹ 1,19,892 Cr.
- Current Price:₹ 637
- 52-Week High/Low: ₹ 730 / 439
- P/E Ratio: 14.8
- Dividend Yield: 1.41%
- Return on Capital Employed (ROCE): 11.3%
- Return on Equity (ROE): 15.9%
Shriram Finance Ltd (STFC) has been growing well. Its revenue and profit have been increasing every year. The company makes good money from its business, shown by a return on equity (ROE) of 15.9%. This means it uses its money wisely to earn profits.
The company’s stock price is not too high compared to others, making it a good option for investors. It also pays a dividend of 1.41%, which means investors get some money back from their investment. The company’s profit from financing has also grown, showing that its main business is doing well.
The company has more assets now, which shows it is expanding. It does have some debt, but it makes enough money to handle it. Shriram Finance focuses on lending for used commercial vehicles and two-wheelers, which helps it stand out in the market.
Even though there are some risks, the company is growing and making profits. It is a good option for investors who want to hold stocks for the long term.