Shriram Finance Ltd. was listed on the National Stock Exchange (NSE) on December 11, 1996. Since listing, it has given a massive return of around 58,000% to its investors. Will Shriram Finance continue to provide such impressive returns this year and in the future as well? In this article, we will explore Shriram Finance’s future growth potential and Shriram Finance share price target for 2025 to 2050.
About Shriram Finance
Shriram Finance Limited is a big finance company in India that gives loans for trucks, two-wheelers, businesses, and personal needs. It started in 1979 and is part of the Shriram Group.
Shriram Finance Business Model
- Vehicle Financing: Shriram Finance primarily earns by providing loans for commercial vehicles, passenger vehicles, and two-wheelers. It has a strong presence in financing used commercial vehicles, primarily for small truck operators.
- Retail and SME Loans: The company provides personal loans, gold loans, and small business loans, targeting self-employed individuals and small enterprises that have limited access to traditional banking credit.
- Housing Finance: Through its subsidiary, Shriram Housing Finance, the company provides home loans, especially for affordable housing and middle-income customers.
- Insurance and Wealth Management: Shriram Finance generates revenue by cross-selling insurance and investment services to its large customer base, allowing it to provide additional financial solutions.
Shriram Finance Fundamental Analysis
| Stock Name | Shriram Finance Ltd. |
|---|---|
| Market Cap | ₹ 1,10,016 Cr. |
| 52W High | ₹ 730 |
| 52W Low | ₹ 439 |
| Stock P/E (TTM) | 13.6 |
| Book Value | ₹ 279 |
| Dividend Yield | 1.54 % |
| ROCE | 11.3 % |
| ROE | 15.9% |
| Face Value | ₹ 2.00 |
| Share holders | Mar 2023 | Mar 2024 | Dec 2024 |
|---|---|---|---|
| Promoters | 25.51% | 25.42% | 25.40% |
| FIIs | 49.78% | 53.90% | 53.08% |
| DIIs | 11.74% | 15.69% | 15.93% |
| Public | 12.96% | 5.00% | 5.58% |
| No. of Shareholders | 99,212 | 1,18,031 | 1,81,398 |
Key Factors Driving Shriram Finance Future Growth
- More People Need Loans: Many people are buying trucks, bikes, and starting small businesses. Shriram Finance can grow by giving them loans.
- Helping Small Business Owners: Big banks don’t always give loans to small business owners. Shriram Finance helps them, which brings more customers.
- Online Services Make Loans Easy: Shriram Finance is using mobile apps and websites so people can apply for loans and pay from home. This helps more people take loans.
- Partnering with Vehicle Dealers: Shriram Finance works with shops that sell trucks and bikes. This way, people can take loans directly when they buy a vehicle.
- Getting More Money from Fixed Deposits: People keep their savings with Shriram Finance as fixed deposits. Shriram Finance uses this money to give loans and grow its business.
- Opening More Branches: Shriram Finance is expanding to new cities and villages, so more people can take loans.
- Government Support: The government is making rules to help small businesses and transport owners. This helps Shriram Finance grow.
- Good Loan Collection System: Shriram Finance makes sure people repay their loans on time. This reduces losses and increases profits.
- Earning from Insurance and Investments: Besides loans, Shriram Finance also sells insurance and invests money wisely. This brings extra income.
Pros of Investing in Shriram Finance
- Strong Sales Growth: Shriram Finance has delivered a strong sales growth of 26% CAGR over 3 years.
- Strong Profit Growth: Shriram Finance has delivered a strong profit growth of 42% CAGR over 3 years.
- Healthy Dividend Payout Ratio: Shriram Finance has maintained a healthy dividend payout of 21.8%.
Cons of Investing in Shriram Finance
- High Debt: Shriram Finance has a debt-to-equity ratio of 3.99, meaning it has borrowed a lot of money. If interest rates go up or the company earns less, it could struggle to repay its loans.
- Affected by the Economy: Shriram Finance depends on people taking loans. If the economy slows down, fewer people may take loans, and more people may struggle to repay, which can hurt the company’s profits.
- Risk from Foreign Loans: Shriram Finance plans to borrow $1.5 billion from foreign markets. If the exchange rate changes, the company may have to pay back more money than expected.
- Stock Might Be Overpriced: The stock’s price-to-book (P/B) ratio is 2.20. This means the stock might be expensive compared to its actual value, and future returns may not be as high.
| Years | Target Price |
|---|---|
| Shriram Finance Share Price Target 2025 | ₹680 to ₹730 |
| Shriram Finance Share Price Target 2026 | ₹820 to ₹950 |
| Shriram Finance Share Price Target 2027 | ₹980 to ₹1230 |
| Shriram Finance Share Price Target 2028 | ₹1170 to ₹1600 |
| Shriram Finance Share Price Target 2029 | ₹1410 to ₹2080 |
| Shriram Finance Share Price Target 2030 | ₹1700 to ₹2700 |
| Shriram Finance Share Price Target 2035 | ₹3400 to ₹8100 |
| Shriram Finance Share Price Target 2040 | ₹6800 to ₹24800 |
| Shriram Finance Share Price Target 2050 | ₹27500 to ₹145000 |
Conclusion
Shriram Finance is a strong and growing company that gives loans for vehicles, businesses, and personal needs. It is making good profits, expanding to new areas, and using digital services to make loans easier. However, it also has some risks, like high debt, changes in the economy, and stock price ups and downs. Investors should look at both the good and bad sides before investing. If Shriram Finance keeps managing its loans well and grows carefully, it can continue to do well in the future. For the latest updates, you can visit Shriram Finance Official Website.
Disclaimer
This article is for educational purposes only. It is not a stock recommendation and should not be treated as such. Please ask your financial advisor before making any investment decision.