Brokerages have turned increasingly optimistic on Shriram Finance, renewing Buy calls as the non banking finance major enters a phase of stronger balance sheet quality and improving earnings visibility. After a period marked by integration work and cautious lending conditions, analysts believe the company is now positioned to deliver steady growth with better margins and lower risk.
A key reason behind the positive outlook is the improvement in funding costs. With enhanced access to capital markets and stronger confidence among lenders, Shriram Finance has been able to raise money at more competitive rates. This directly supports margins and allows the company to price loans more attractively without compromising profitability. For an NBFC with a large presence in vehicle finance and small business lending, even modest reductions in borrowing costs can translate into meaningful gains at the bottom line.
Asset quality trends have also played a major role in shaping broker sentiment. Analysts point out that delinquency levels have stabilised and collections remain healthy, especially in the used commercial vehicle segment which forms a core part of the company’s portfolio. As economic activity remains resilient and transport demand stays firm, credit costs are expected to stay under control, supporting earnings consistency over the medium term.
Growth visibility is another factor supporting the Buy call. Shriram Finance continues to benefit from its deep reach in semi urban and rural markets where credit demand remains robust. Its diversified loan book and strong on ground franchise give it an edge over peers when it comes to sourcing customers and managing risk. Brokers expect loan growth to remain healthy, aided by improving consumer sentiment and steady infrastructure and logistics activity.
Valuation comfort further strengthens the investment case. Despite a strong run in recent years, analysts believe the stock still offers reasonable upside when compared with long term growth prospects and return ratios. Improved return on equity, combined with a stronger capital base, makes the company attractive for investors looking for exposure to the financial sector beyond traditional banks.
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