SHRIRAMFIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.1

💰 Shriram Finance Ltd demonstrates strong profitability, attractive valuation, and robust institutional interest, though high leverage and overbought technicals suggest caution for new entries.

📈 Positive

• Attractive Valuation: P/E of 16.1 is below the industry average of 22.6.
• Strong Profitability: ROE of 16.4% and ROCE of 11.2% reflect efficient capital deployment.
• Healthy EPS: ₹52.8 supports long-term earnings visibility.
• Dividend Yield: 1.32% offers consistent income for shareholders.
• Positive DII Sentiment: DII holdings increased by 2.33%, indicating domestic confidence.

⚠️ Limitation

• High Leverage: Debt-to-equity ratio of 4.16 raises concerns about financial risk.
• Overbought RSI: 84.2 suggests potential for short-term correction.
• MACD Elevated: 27.6 may indicate exhaustion of bullish momentum.
• Decline in FII Holdings: -3.00% reflects cautious foreign sentiment.

📉 Company Negative News

• Stock trading near 52-week high with overbought indicators.
• Concerns over asset quality and provisioning in high-leverage NBFCs.

📈 Company Positive News

• Quarterly PAT rose to ₹2,156 Cr., maintaining consistent growth.
• Strong volume surge indicates active investor participation.
• Analysts bullish on rural credit demand and vehicle financing growth.

🏭 Industry

• NBFC sector benefits from expanding credit demand and financial inclusion initiatives.
• Industry P/E of 22.6 reflects moderate valuation norms.
• Peers include Bajaj Finance, Muthoot Finance, and Cholamandalam Investment.

🧾 Conclusion

• Entry Zone: ₹700–₹720 could be a better accumulation range post RSI cooling.
• Long-Term View: Hold for 3–5 years; strong fundamentals and sector tailwinds support sustained growth.
• Valuation Edge: Reasonable pricing with upside potential if leverage is managed prudently.