Shriram Finance shares surged by 7% to reach ₹3,309 on 28th October, following an impressive second quarter (Q2FY25) performance that caught the attention of brokerages. The financial institution’s steady growth, robust asset quality, and positive guidance for FY25 led to multiple 'buy' calls from analysts, underscoring its attractiveness for share market investment.
Brokerages raise target prices with a positive outlook
HSBC raised its target price from ₹3,600 to ₹3,725, retaining a 'buy' rating on the stock. According to HSBC, Shriram Finance’s Q2FY25 results highlight one of its strongest operating periods since 2010, delivering across all performance indicators with no significant misses in asset quality or growth projections. The company's guidance for the full fiscal year has strengthened its appeal as a solid investment in the current market.
Analysts noted the company’s ability to meet various growth metrics while maintaining an undemanding valuation, further reinforcing their confidence in Shriram Finance’s potential.
Consistent performance amidst sector challenges
Other firms also praised the company’s consistent performance amidst sector-wide asset quality concerns, with particular strength in MSME and tractor loan segments. Analysts projected an overall growth trajectory of approximately 20%, citing these as key areas to monitor in the upcoming quarters.
Shriram Finance’s steady financial progress comes at a time when investors are increasingly cautious due to broader economic uncertainties. The firm’s ability to maintain asset quality while posting robust growth has further bolstered its credibility in the eyes of investors. For those looking into share market investment, Shriram Finance has emerged as a compelling option.
Impressive Q2 results bolster investor confidence
Shriram Finance posted a notable 18.3% year-on-year (YoY) increase in net profit for Q2FY25, reaching ₹2,071 crore. Additionally, the company’s net interest income (NII) climbed by 16.3% YoY, amounting to ₹5,606 crore. Shriram Finance’s board also announced a dividend of ₹22 per share, reflecting its commitment to shareholder value.
However, the company’s net interest margin (NIM) slightly decreased to 8.74% in Q2FY25, compared to 8.8% in the previous quarter. Despite this minor dip, Shriram Finance maintained a solid position in the sector. The company’s gross stage-3 assets increased to ₹12,764 crore from ₹12,408 crore in the previous quarter, which remains within manageable limits according to analysts.
Strategic growth and forward outlook
Shriram Finance’s Q2FY25 performance demonstrates its strong operational foundations, with significant growth across multiple segments and a stable financial structure. The company’s focus on key growth areas such as MSME and rural lending aligns with its strategic plans, allowing it to navigate current market challenges effectively.
Brokerages remain optimistic, seeing potential for continued growth in the medium term, driven by Shriram Finance's targeted approach and commitment to maintaining asset quality. As Shriram Finance charts its course for the future, it stands out as a robust choice for investors eyeing the financial sector.
The recent surge in Shriram Finance shares reflects its solid performance in Q2FY25 and the confidence that brokerages have shown in its future growth. With target prices raised by leading analysts, the company is well-positioned as an attractive option for share market investment.
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