Shriram Finance (SHFL IN) – Event Update – Multiple synergies to accrue with MUFG deal – BUY
Published on 30 Dec 2025
SHFL is guiding for a higher growth run-rate of 18%-20% as it deploys capital across Vehicle finance, Gold and SME lending business. While it is looking to expand in SME and Gold loans, it expects growth in VF to come from retaining existing customers with a better profile. We build a CAGR of ~18% over FY25-28E driven by growth across segments. SHFL has already received a credit rating upgrade from CARE Ratings to AAA Stable which is likely to result in lower CoF (~45% of borrowings to reprice). We build a ~50 bps improvement in average CoF, translating into a ~20 bps improvement in (calc) NIM to 9.8% by FY28E. We increase our FY27/ FY28E estimates by 4%/ 7% on strong AUM growth, favorable margin profile and controlled credit cost, resulting in RoA of 3.2% by FY28E. We tweak our multiple to 2.3x (vs. 2.2x earlier) and roll-forward to Dec-27 P/ABV. Reiterate BUY with a revised TP of Rs 1,150.
