SHRIRAMFIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.0

📊 Financials: Shriram Finance has a market cap of ₹1,69,652 Cr. Current price is ₹902 with a 52-week high/low of ₹914/₹493. PAT this quarter is ₹2,307 Cr vs ₹2,156 Cr in the previous quarter, showing steady growth. ROCE at 11.2% and ROE at 16.4% reflect healthy efficiency for a financial services company. Debt-to-equity ratio of 3.88 indicates high leverage, typical for NBFCs but worth monitoring.

💹 Valuation: Stock P/E is 18.8, below industry PE of 21.2, suggesting fair valuation. Book value is ₹321, giving a P/B ratio of ~2.8. PEG ratio at 0.40 indicates strong earnings growth relative to valuation. EPS is ₹54.1, showing consistent profitability. Dividend yield of 1.16% adds shareholder value.

🏭 Business Model: Shriram Finance operates as a diversified NBFC with strong presence in vehicle financing, SME loans, and retail credit. Competitive advantage lies in its wide customer base, rural penetration, and strong brand trust. Business model is resilient but sensitive to credit cycles and interest rate movements.

📈 Entry Zone: Technically, DMA 50 (₹793) and DMA 200 (₹691) suggest strong support zones. Entry is favorable near ₹790–₹820 if price corrects. Current RSI at 65.8 indicates mildly overbought conditions, suggesting caution for fresh entry at CMP.

🕰️ Long-Term Holding: Strong profitability, fair valuation, and growth potential support long-term compounding. Investors can accumulate on dips closer to support zones, while monitoring debt levels and credit cycle risks.

Positive

• ✅ Healthy ROE (16.4%) and ROCE (11.2%)
• ✅ Fair valuation (P/E 18.8 vs industry 21.2)
• ✅ Strong EPS (₹54.1)
• ✅ DII holding increased (+2.33%)

Limitation

• ⚠️ High debt-to-equity ratio (3.88)
• ⚠️ RSI at 65.8 indicates overbought zone
• ⚠️ P/B ratio ~2.8 reflects premium valuation

Company Negative News

• 📉 FII holding reduced (-3.00%)
• 📉 High leverage typical of NBFC sector

Company Positive News

• 📈 Quarterly PAT growth (2,156 Cr → 2,307 Cr)
• 📈 DII inflows (+2.33%)

Industry

• 🏭 NBFC industry PE at 21.2 highlights sector growth potential
• 🏭 Sector supported by credit demand in retail and SME segments

Conclusion

🔎 Shriram Finance is fundamentally strong with healthy profitability, fair valuation, and strong market presence. Entry zone lies near ₹790–₹820. Long-term investors can accumulate on dips, while monitoring leverage and credit cycle risks.

Would you like me to extend this with a peer benchmarking overlay comparing Shriram Finance against other NBFCs, or a sector scan to highlight undervalued financial services companies?