Nomura has maintained its buy rating on Shriram Finance with a target price of ₹1,200 per share, citing a significant improvement in the company’s funding profile following its credit rating upgrade to AAA/Stable. The brokerage believes the upgrade materially strengthens Shriram Finance’s balance sheet flexibility and enhances its ability to raise long-term funds at lower costs, supporting both growth and profitability over the medium term.
Nomura highlighted management’s guidance of around 20% AUM growth alongside a return on assets (RoA) of about 3.6%, supported by improving portfolio quality and tighter underwriting. The brokerage expects credit costs to decline by 10–20 basis points, aided by better customer retention and a higher share of repeat borrowers, which should help stabilise asset quality across cycles.
Looking ahead, Nomura expects Shriram Finance’s RoA to improve further to around 3.9% by FY28, before moderating slightly to around 3.7%, reflecting the natural impact of scale as the balance sheet expands. The brokerage said the moderation should not be viewed negatively, as it comes alongside stronger growth visibility and a structurally more resilient funding mix.
Overall, Nomura remains positive on Shriram Finance’s medium-term outlook, noting that the AAA rating upgrade places the company among the strongest-funded NBFCs in India and provides confidence in its ability to navigate credit cycles while sustaining healthy growth.
Disclaimer: The views and recommendations above are those of Nomura. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
