Multiple analysts having coverage on Nifty 50 constituent Shriram Finance Ltd. have slashed their price targets on the stock after it reported its September quarter results on Friday. The stock had ended 4% lower on Friday after the results, when the stock had dropped as much as 6.5% as an initial reaction to the results. The stock is down another 6% on Monday.
The company has also cut its full year growth guidance to 15% to 17% from the 18% projected earlier, monitoring multiple factors, from the West Asia situation to the sub-par monsoon in the country. The guidance cut was made during their earnings call.
We have been cautious even though our initial guidance was 18% growth. Looking at the impact of the war situation in West Asia and the peak monsoon, we have been growing a little less than that. In the first quarter our growth was around 15%. In the second quarter 17%. We will be anywhere growing anywhere between these two 15% to 17%. So we are very cautious in our growth.SHRIRAM FINANCE MANAGEMENT ON THE EARNINGS CALL
HSBC Cuts Shriram Finance Price Target
HSBC has maintained its “buy” rating on Shriram Finance but has cut its price target to ₹1,000 from ₹1,140 earlier.
It said that better margins and operational efficiencies should be partly offset by higher credit costs.
Despite cutting its price target, HSBC has increased Shriram Finance’s financial year 2027-2029 Earnings Per Share (EPS) estimates by 2.8% to 6.5% respectively.
CLSA Also Cuts Target On Shriram Finance
CLSA has an “outperform” rating on Shriram Finance but cut its price target to ₹1,100 from ₹1,200 earlier.
It highlighted that the company’s Profit After Tax (PAT) was a miss by 4% compared to their estimates, driven by higher credit costs and partly offset by a stronger Pre-Provisioning Operating Profit.
Citi Cites Growth Warnings While Cutting Target
Citi has also maintained its “buy” rating and made a price target cut similar to CLSA, from ₹1,200 earlier to ₹1,100.
With drought conditions in select regions and crude price headwinds weighing on outlook, the management has flagged elevated credit costs for the next two to three quarters, and conservatively guided for financial year 2027’s AUM growth to be between 15% to 17%, despite only 9% growth year-to-date so far, Citi said.
According to the investment banking firm, the equity buffer with Shriram Finance should keep margins elevated in the near-term for the company before normalizing.
JPMorgan Cuts Shriram Finance Target by Over ₹100
JPMorgan has retained its “overweight” stance on Shriram Finance but has cut its price target to ₹1,095 from ₹1,215 earlier, citing disappointing asset quality trends, higher provisions and higher credit costs, along with an increase in both Gross Stage 2 and Gross Stage 3 assets.
It said that the management’s post-earnings commentary confirmed that elevated credit costs could continue for at least another quarter or two before normalizing, indicating that they will miss their credit cost guidance for the year.
Although the management has highlighted this to be a temporary issue, the deterioration, according to them, is not broad-based and is limited to select products.
41 analysts have coverage on Shriram Finance currently, of which, none of them have a “sell” rating on the stock, despite the multiple price target cuts. 38 of them have a “buy” rating and three others have a “hold” recommendation on the stock. The consensus estimates of price targets implies an upside potential of 34.4% on the stock.
Shares of Shriram Finance are down 5.6% on Monday to ₹815. The stock is down 15% so far this year, and has corrected 25% from its 52-week high of ₹1,153.