Current Rating and Its Significance
Shriram Finance Ltd’s current 'Buy' rating indicates a positive outlook based on a comprehensive evaluation of its quality, valuation, financial trend, and technical indicators. This rating suggests that the stock is expected to deliver favourable returns relative to its peers and the broader market, making it a compelling choice for investors seeking exposure to the Non Banking Financial Company (NBFC) sector.
Quality Assessment
As of 07 January 2026, Shriram Finance Ltd maintains a strong quality grade, reflecting robust fundamentals and operational excellence. The company boasts an average Return on Equity (ROE) of 14.00%, signalling efficient capital utilisation and consistent profitability. Furthermore, it has demonstrated healthy long-term growth, with net sales expanding at an annual rate of 22.00% and operating profit growing at 22.80% per annum. This sustained growth trajectory underpins the company’s ability to generate shareholder value over time.
Valuation Considerations
Despite its strong fundamentals, the stock is currently graded as 'expensive' in terms of valuation. This suggests that the market price reflects a premium relative to earnings and book value metrics. Investors should be aware that while the valuation is elevated, it is often justified by the company’s consistent performance and growth prospects. The premium valuation underscores market confidence in Shriram Finance’s business model and future earnings potential.
Financial Trend and Performance
The financial trend for Shriram Finance Ltd remains positive, supported by a track record of eight consecutive quarters of positive results. The latest quarterly figures highlight the company’s operational strength, with net sales reaching a record ₹11,912.44 crores, PBDIT at ₹8,803.40 crores, and PBT less other income at ₹3,104.12 crores. These figures demonstrate the company’s ability to sustain profitability and manage costs effectively in a competitive environment.
Additionally, the stock has delivered impressive returns over various time frames. As of 07 January 2026, the stock has gained 68.38% over the past year, significantly outperforming the BSE500 index in each of the last three annual periods. Shorter-term returns also remain strong, with a 3-month gain of 49.42% and a 6-month gain of 48.41%, reflecting sustained investor interest and confidence.
Technical Outlook
The technical grade for Shriram Finance Ltd is bullish, indicating positive momentum in the stock price. Despite a minor 0.62% decline on the day of reporting, the overall trend remains upward, supported by strong volume and institutional interest. Institutional holdings stand at a substantial 68.27%, signalling that well-informed investors with significant resources continue to back the company. This institutional confidence often translates into price stability and reduced volatility, which can be favourable for long-term investors.
Implications for Investors
The 'Buy' rating from MarketsMOJO reflects a balanced view that combines strong quality and financial trends with a premium valuation and positive technical signals. For investors, this means that Shriram Finance Ltd is positioned as a growth-oriented stock with solid fundamentals, albeit at a higher price point. The company’s consistent earnings growth, robust return metrics, and institutional support make it a viable candidate for portfolios seeking exposure to the NBFC sector’s growth potential.
Investors should consider the valuation premium carefully and assess their risk tolerance accordingly. While the stock’s past performance and current outlook are encouraging, market conditions and sector-specific risks should also be monitored closely.
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Company Profile and Market Position
Shriram Finance Ltd is a large-cap player in the NBFC sector, known for its strong market presence and diversified lending portfolio. The company’s strategic focus on retail and small business financing has enabled it to capture significant market share while maintaining asset quality. Its ability to consistently deliver positive quarterly results highlights operational resilience amid evolving economic conditions.
Long-Term Growth Prospects
The company’s sustained growth in net sales and operating profit at rates exceeding 20% annually points to robust demand for its financial products and services. This growth is supported by a stable macroeconomic environment and increasing credit penetration in India’s non-banking financial space. Shriram Finance’s focus on innovation and customer-centric offerings further strengthens its competitive advantage.
Risk Factors and Considerations
While the outlook is positive, investors should remain mindful of sector-specific risks such as regulatory changes, interest rate fluctuations, and asset quality pressures. The premium valuation also implies that any adverse developments could lead to sharper price corrections. Therefore, continuous monitoring of the company’s quarterly performance and broader economic indicators is advisable.
Summary
In summary, Shriram Finance Ltd’s 'Buy' rating as of 15 Dec 2025, supported by a Mojo Score of 72, reflects a well-rounded investment case. The company’s strong quality metrics, positive financial trends, and bullish technical outlook justify this recommendation despite an expensive valuation. As of 07 January 2026, the stock’s impressive returns and institutional backing further reinforce its appeal for investors seeking growth in the NBFC sector.
Investors looking to capitalise on Shriram Finance’s strengths should consider the current market price in relation to their investment horizon and risk appetite, recognising the stock’s potential for long-term capital appreciation.
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