Shriram Finance Q3 Results Review - A Strong Quarter On Expected Lines: Centrum Broking

Centrum Broking Report

Shriram Finance Company Ltd.'s reported strong performance in Q3 FY24 aided by strong assets under management growth (up 21% YoY and 6% QoQ) and healthy return profile: return of assets at 3.3%. Net interest margin (on AUM) improved 10 bps QoQ to 9.4%.

Operating profits increased 6% QoQ (2.6% ahead of our estimates) while profit after tax increased 4% QoQ (in-line with our estimates). Asset Quality continues to improve further.

Shriram Finance is evaluating various options to raise capital in its housing finance subsidiary.

We maintain 'Buy' with a revised target price of Rs 2800, premised on 2 times H1 FY26P/adjusted book value (1.7 times earlier).

Strong execution on merger synergies, improved return profile and sector tailwinds in asset quality justifies re-rating.

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