Shriram Finance Ltd is Rated Buy

Current Rating and Its Significance

MarketsMOJO’s 'Buy' rating for Shriram Finance Ltd signals a positive outlook for investors seeking exposure to the Non Banking Financial Company (NBFC) sector. This recommendation is based on a comprehensive evaluation of the company’s quality, valuation, financial trend, and technical indicators. The 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 aiming to capitalise on growth opportunities within the NBFC space.

Quality Assessment

As of 20 February 2026, Shriram Finance Ltd maintains a strong quality grade, reflecting robust fundamentals and operational excellence. The company boasts a consistent track record of profitability, with an average Return on Equity (ROE) of 14.00%, indicating efficient utilisation of shareholder capital. Additionally, the firm has reported positive results for nine consecutive quarters, underscoring its ability to sustain earnings growth amid varying market conditions. This consistency is a key factor in the 'Buy' rating, as it demonstrates resilience and sound management practices.

Valuation Considerations

While the valuation grade is marked as 'expensive', this reflects the premium investors are willing to pay for Shriram Finance Ltd’s quality and growth prospects. The current market capitalisation categorises it as a large-cap stock, which typically commands higher valuations due to stability and market leadership. Investors should note that the premium valuation is justified by the company’s strong fundamentals and growth trajectory, but it also implies that the stock may be sensitive to broader market corrections or sector-specific headwinds.

Financial Trend Analysis

The financial trend for Shriram Finance Ltd is positive, supported by healthy growth in key metrics. As of 20 February 2026, the company’s net sales have grown at an annualised rate of 22.46%, while operating profit has expanded by 23.66% annually. These figures highlight the firm’s ability to scale operations efficiently and improve profitability. Quarterly data reveals record highs with net sales reaching ₹12,170.76 crores, profit before tax (excluding other income) at ₹3,337.78 crores, and profit after tax at ₹2,529.67 crores. Such robust financial performance underpins the favourable rating and signals sustained momentum going forward.

Technical Outlook

The technical grade for Shriram Finance Ltd is bullish, reflecting positive market sentiment and momentum. The stock’s recent price performance supports this view, with a 1-year return of +81.80% and a 6-month gain of +71.37% as of 20 February 2026. Shorter-term returns also show strength, including a 3-month increase of +27.91% and a 1-month rise of +7.07%. These trends indicate strong investor confidence and suggest that the stock is well-positioned to maintain its upward trajectory in the near term.

Institutional Confidence

Another important factor contributing to the 'Buy' rating is the high level of institutional ownership, currently at 68.52%. Institutional investors typically conduct rigorous fundamental analysis before committing capital, and their significant stake in Shriram Finance Ltd reflects confidence in the company’s prospects. This institutional backing can provide stability to the stock price and reduce volatility, which is reassuring for long-term investors.

Market Performance Snapshot

As of 20 February 2026, Shriram Finance Ltd’s stock price has demonstrated resilience and growth. The day’s change was a modest +0.31%, while the year-to-date return stands at +6.04%. Over the past week, the stock experienced a slight dip of -0.80%, but this is outweighed by strong gains over longer periods. The positive momentum over 3, 6, and 12 months highlights the stock’s appeal amid a competitive NBFC sector.

Implications for Investors

For investors, the 'Buy' rating on Shriram Finance Ltd suggests that the stock is well-positioned to deliver attractive returns, supported by strong fundamentals and positive market dynamics. The company’s consistent profitability, robust growth rates, and bullish technical indicators provide a solid foundation for confidence. However, the premium valuation indicates that investors should remain mindful of potential market fluctuations and sector-specific risks.

Sector Context and Outlook

Shriram Finance Ltd operates within the NBFC sector, which plays a critical role in India’s financial ecosystem by providing credit to underserved segments. The sector has witnessed steady growth, driven by increasing demand for consumer and commercial financing. Shriram Finance’s leadership position and strong institutional support position it favourably to capitalise on these trends. Investors looking for exposure to NBFCs with a blend of growth and stability may find this stock particularly appealing.

Summary

In summary, Shriram Finance Ltd’s 'Buy' rating by MarketsMOJO, last updated on 15 December 2025, reflects a comprehensive assessment of the company’s quality, valuation, financial trend, and technical outlook. As of 20 February 2026, the stock exhibits strong fundamentals, healthy growth, and positive market momentum, making it a compelling option for investors seeking long-term value in the NBFC sector.

Key Metrics at a Glance (As of 20 February 2026)

• Mojo Score: 72.0 (Buy Grade)
• Market Capitalisation: Large Cap
• Return on Equity (ROE): 14.00%
• Net Sales Growth (Annualised): 22.46%
• Operating Profit Growth (Annualised): 23.66%
• Institutional Holdings: 68.52%
• 1-Year Stock Return: +81.80%
• 6-Month Stock Return: +71.37%
• Technical Grade: Bullish

Investors should consider these factors alongside their individual risk tolerance and portfolio objectives when evaluating Shriram Finance Ltd as a potential investment.

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