Shriram Finance Shares Reach New High After Impressive Q2 Earnings

Shriram Finance, a non-banking financial company (NBFC), saw its stock price surge to a new all-time high of ₹2,029.7 per share after reporting impressive Q2FY24 results. The company’s consolidated net profit increased by 13% compared to the same period last year, reaching ₹1,792 crore. The net interest income also grew by 18.80% year-on-year, driven by strong loan growth. With total assets under management increasing by 19.65%, Shriram Finance continues to establish itself as a leading financial institution.

In response to the company’s stellar performance, brokerage firms have maintained their ‘buy’ ratings on the stock. Centrum Broking, for instance, has a target price of ₹2,400 per share, indicating an upside of 22.5% from the current market price. Motilal Oswal believes that Shriram Finance can sustain its net interest margin trajectory and further enhance its credit costs. Kotak Institutional Equities also maintains a ‘buy’ call with a target price of ₹2,300 per share.

Shriram Finance’s success can be attributed to various factors. The company has focused on offering financing solutions for commercial vehicles, passenger vehicles, construction equipment, farm equipment, micro, small, and medium enterprises (MSMEs), two-wheelers, as well as gold and personal loans. By diversifying its product mix and expanding its distribution network, Shriram Finance has been able to capitalize on cross-selling opportunities and reach new customers.

The company’s growth in net interest margin is a result of several factors, including a shift towards higher-yield offerings, the reduction of excess liquidity, and a decrease in the cost of funds. Shriram Finance has also seen improvement in its stressed loans, which have remained stable and consistently improved since the Covid-19 pandemic.

Overall, Shriram Finance’s impressive Q2 earnings and positive outlook from brokerage firms make it an attractive investment option. With its strong performance and strategic initiatives, the company is well-positioned for sustained growth in the future.