Shriram Finance Ltd: Newest Nifty Entrant Crosses Rs 1 Lakh Crore Market Cap Milestone

Shriram Finance Ltd., a leading non-banking financial company (NBFC) in India, achieved a significant milestone by surpassing Rs 1 lakh crore in market capitalisation. The company’s stock soared to an all-time high of Rs 2,695.60, marking a 4.59% increase in a single trading session. Since its inclusion in the Nifty 50 on March 28, 2024, the stock has risen by 13.7%, reflecting strong investor confidence. Year-to-date, the shares have surged by 31.12%, outperforming broader market indices. Over a decade, Shriram Finance has delivered an impressive return of 193.82%.

Financial Performance and Growth

In the fourth quarter of FY24, Shriram Finance reported a robust 57% year-on-year increase in consolidated net profit, reaching Rs 2,021.28 crore. Total income for the quarter rose by 24% to Rs 9,918.3 crore compared to the previous year. The company’s total assets under management grew by 21.10% year-on-year, standing at Rs 2.25 Lakh crore as of March 2024. The gross non-performing asset (NPA) ratio improved to 5.45% from 6.21% in the same period last year, underscoring enhanced asset quality.

Sectoral Influence and Shareholder Pattern

Shriram Finance specializes in commercial vehicle financing and extends services across various loan segments, including vehicles, personal loans, and business loans. The company’s strategic focus on profitability over top-line growth has been pivotal in sustaining its financial health. Foreign institutional investors (FIIs) have significantly increased their stake to 53.90% as of March 2024, highlighting strong external confidence in the company’s growth trajectory. Domestic institutional investors’ shareholding also grew to 15.69% during the same period.

Future Prospects and Challenges

Looking ahead, Shriram Finance aims to maintain a return on equity (ROE) target of 16% to 18%, expecting to surpass 17% in the current financial year. The company faces challenges such as market concerns over personal loans slowdown and price fluctuations in the commercial vehicle segment. However, it remains optimistic about steady growth in the commercial vehicle sector and plans to inject capital into its housing subsidiary for expanded growth opportunities.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.