CashNews.co
Shriram Finance Ltd. extended its strong quarterly performance and remained the top pick in a relatively weak sector, Nuvama Institutional Equities said as it upped its target price.
Shriram Finance reported a year-on-year increase in total income of 18%, reaching Rs 10,097 crore in the second quarter, compared to Rs 8,564 crore in the previous year. The company’s net profit also saw a significant rise of 20.2%, amounting to Rs 2,153 crore, up from Rs 1,792 crore.
The non-banking financial company reported positive earnings with strong asset under management growth, stable net interest margin with lower incremental cost of finances along with strong asset quality, Nuvama said. This has been a key investor focus for BFSI stocks in the second quarter, the brokerage said.
“In a quarter when many lenders are missing credit costs, the company stands out for its strong all-round performance.”
The brokerage maintained the ‘buy’ rating and increased the target price to Rs 3,600 per share from Rs 3,400 apiece earlier, implying an upside of 16.5% from the previous close.
Asset quality in commercial vehicles remains strong due to firm resale values of used vehicles and higher prices of new vehicles and stable fuel prices, it said. Slowdown in the commercial vehicle cycle and tight liquidity leading to higher cost of finance are the key downside risks, Nuvama said.