Shriram Finance rallies as investors cheer stellar operational Q2 performance by NBFC

Shriram Finance (SHRIRAMFIN) shares surged on Friday after the non-banking financial company staged a strong financial performance for the July-September period (Q2 FY24).

Shriram Finance (SHRIRAMFIN) shares surged on Friday after the non-banking financial company staged a strong financial performance for the July-September period (Q2 FY24). The stock of Shriram Finance strengthened by as much as Rs 154.4, or 8.6 per cent, to Rs 1,952 apiece on BSE, coming within Rs 23 of a 52-week high scaled last month.

Minutes after the closing bell on Dalal Street the previous day, Shriram Finance reported a 12.6 per cent year-on-year increase in standalone net profit to Rs 1,750.8 crore for the second quarter of the financial year, driven by 20 per cent growth in loans which was 500 basis points above the company's long-term guidance.

The company's net interest income, or the difference between interest earned and interest paid, increased 17.4 per cent to Rs 4,818.2 crore for the quarter ended September 30.

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The financier raised its NIM guidance for the year ending March 2024 to 8.5-9 per cent from 8.5 per cent. It also raised its annual loan growth forecast to 18.20 per cent fro 15 per cent.

Shriram Finance's total assets under management (AUM) stood at Rs 2,02,641 crore, as of September 30, marking an increase of 19.7 per cent compared with the year-ago period, according to a statement.

The company's board declared an interim dividend of Rs 20 per share with a record date of November 6, a 200 per cent payout given the face value of Rs 10 per share. It also gave nod to a proposal to raise funds through multiple routes.

What brokerages make of Shriram Finance's Q2 results

Jefferies maintained a 'buy' rating on Shriram Finance and raised its price target for the NBFC stock by Rs 100 to Rs 2,300 after the company's earnings announcement.

HSBC, which also retained its 'buy' call on Shriram Finance, raised its target by Rs 40 to Rs 2,300.

The brokerages' targets imply an upside of 27.9 per cent in the stock from the previous close.

Many analysts find Shriram Finance's stock valuation to be attractive at the current juncture.

Brokerage	Rating	Price target	Upside vs Thursday's closing price
CLSA	Outperform	Rs 2,050	14%
Morgan Stanley	Overweight	Rs 2,200	22.4%
Jefferies	Buy	Raised to Rs 2,300 from Rs 2,200	27.9%
Citi	Buy	Rs 2,220	23.5%
Macquarie	Outperform	Rs 2,350	30.7%
HSBC	Buy	Raised to Rs 2,300 from Rs 2,260	27.9%

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