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SHRIRAMFIN - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | SHRIRAMFIN | Market Cap | 1,87,826 Cr. | Current Price | 998 ₹ | High / Low | 1,029 ₹ |
| Stock P/E | 20.6 | Book Value | 321 ₹ | Dividend Yield | 0.99 % | ROCE | 11.2 % |
| ROE | 16.4 % | Face Value | 2.00 ₹ | DMA 50 | 930 ₹ | DMA 200 | 766 ₹ |
| Chg in FII Hold | -2.40 % | Chg in DII Hold | 2.64 % | PAT Qtr | 2,522 Cr. | PAT Prev Qtr | 2,307 Cr. |
| RSI | 57.1 | MACD | 23.1 | Volume | 38,94,923 | Avg Vol 1Wk | 62,63,155 |
| Low price | 516 ₹ | High price | 1,029 ₹ | PEG Ratio | 0.44 | Debt to equity | 3.88 |
| 52w Index | 93.8 % | Qtr Profit Var | 5.33 % | EPS | 48.5 ₹ | Industry PE | 18.9 |
📊 Core Financials
- Quarterly PAT at 2,522 Cr vs 2,307 Cr previously, showing steady earnings growth (+5.33%).
- ROE at 16.4% and ROCE at 11.2% reflect healthy capital efficiency for a lending business.
- Debt-to-equity ratio at 3.88 indicates high leverage, typical for NBFCs but worth monitoring.
- EPS at 48.5 ₹ provides a strong earnings base, supported by consistent profitability.
💹 Valuation Indicators
- P/E ratio: 20.6, slightly above industry average of 18.9, suggesting fair valuation.
- P/B ratio: ~3.1 (998 ₹ / 321 ₹ book value), showing moderate premium pricing.
- PEG ratio: 0.44, indicating attractive growth-adjusted valuation.
- Intrinsic value appears close to current price, offering reasonable margin of safety.
🏢 Business Model & Competitive Advantage
- Shriram Finance operates as a diversified NBFC, focusing on vehicle finance, SME lending, and retail credit.
- Competitive advantage lies in strong rural and semi-urban presence, customer trust, and wide distribution network.
- Exposure to India’s growing credit demand provides long-term growth opportunities.
📈 Entry Zone & Long-Term Guidance
- Entry zone: 950–980 ₹ range (near 50 DMA support at 930 ₹).
- Long-term holding viable for investors seeking exposure to India’s NBFC growth story.
- Accumulation recommended gradually, given high leverage and sector cyclicality.
Positive
- Strong PAT growth (+5.33% sequential).
- Healthy ROE (16.4%) and ROCE (11.2%).
- DII holdings increased (+2.64%), showing domestic institutional confidence.
Limitation
- High debt-to-equity ratio (3.88), typical for NBFCs but adds financial risk.
- P/E slightly above industry average, limiting valuation comfort.
- Dividend yield at 0.99% is modest.
Company Negative News
- FII holdings decreased (-2.40%), showing reduced foreign investor confidence.
- High leverage remains a concern in volatile credit cycles.
Company Positive News
- Quarterly PAT growth demonstrates strong operational performance.
- DII holdings increased significantly, showing domestic support.
Industry
- Industry PE at 18.9, close to Shriram Finance’s 20.6, suggesting fair sector valuation.
- NBFC sector expected to grow steadily with rising credit demand in India.
Conclusion
- Shriram Finance is fundamentally strong with consistent profitability and strong ROE.
- Valuations are fair, but high leverage requires cautious accumulation.
- Accumulation near 950–980 ₹ is suitable for long-term investors seeking NBFC exposure with growth potential.
I can also extend this into a peer comparison with Bajaj Finance and Muthoot Finance to highlight how Shriram Finance stacks up in valuation and profitability. Would you like me to draft that next?