Citi has maintained its ‘Buy’ rating on Shriram Finance with a target price of ₹3,600/share, citing strong growth prospects across segments. The management expects to achieve a 17% AUM growth for FY25, led by the two-wheeler and SME segments, which are projected to grow by over 30% year-on-year, followed by gold loans and PV growth at 20% or more.
Despite a slowdown in the CV segment, Shriram Finance remains optimistic about pulling back collection efficiency (CE) levels by December, after witnessing a 20-30bps decline in Q3. Citi highlighted the company’s focus on cross-selling opportunities, with a current cross-sell penetration of 50-55%, leveraging synergies from the merger. While opex is expected to remain elevated in the medium term due to increased spending on advertising and marketing, the company’s ability to maintain stable NIMs and CoFs supports Citi’s positive outlook.
