Shriram Finance share price: NBFC stock hits 52-week high as brokerages hike target after MUFG deal

Shriram Finance Share Price Target: Brokerages are bullish on Shriram Finance following the confirmation of Japan's Mitsubishi UFJ Financial Group Inc ( MUFG) investment in the NBFC. Motilal Oswal and Citi have maintained a Buy rating on the stock while Morgan Stanley has maintained an Overweight stance.

During Monday's trade, shares of Shriram Finance climbed nearly 4 per cent to make a new 52-week high of Rs 937.70 on NSE. Around 10:30 AM, the NBFC stock traded firmly in the green at Rs 934, up 3.6 per cent, with 1.32 crore equities changing hands. It was also the top gainer in the Nifty 50 pack at the time of writing this report.

On the BSE, the counter jumped more than 3 per cent to quote at Rs 932.85 with spurt in volume by more than 1.72 times around the same time. The company's market valuation jumped by more than Rs 6,000 crore to Rs 1,75,907.36 crore at 10:30 AM, according to the BSE website.

Shriram Finance shares are gaining for the last 4 consecutive trading sessions and trading higher than all the key moving averages.

Motilal Oswal On Shriram Finance

Motilal Oswal has described the MUFG deal as a significant and value-accretive transaction for Shriram Finance. It said that the deal supports the NBFC's next phase of growth. The brokerage expects Shriram Finance to deliver a PAT CAGR of approximately 25 per cent over FY25-28E and an RoR/RoE of 3.8 per cent/13.2 per cent by FY27.

Motilal Oswal has set a target price of Rs 1100 on Shriram Finance shares.

Citi has also maintained a Buy rating on Shriram Finance and raised its target price to Rs 100 from Rs 870.

The brokerage said that the MUFG deal is a strong signal of foreign bank confidence in Indian leaders. The deal provides long-term growth capital and also offers earnings visibility for the company.

Citi sees potential credit rating upgrade after the deal and access to low-cost global funding over time. The capital adequacy headroom supports higher AUM growth without near-term dilution risk.

Morgan Stanley On Shriram Finance

On the other hand, Morgan Stanley said that it is Overweight on the counter and raised the target price to Rs 925 from Rs 905. In the bull case scenario, it has set the target at Rs 1,170. The deal, it said, validates long-term franchise strength.

Under the deal, Japan's Mitsubishi UFJ Financial Group Inc will acquire a 20 per cent minority stake in Shriram Finance for Rs 39,618 crore, marking the largest cross-border investment in India's financial sector to date. MUFG will pick up the minority stake through preferential equity shares and will also nominate two directors to the Shriram Finance board.

"The Board of Directors of Shriram Finance Limited at their meeting held today approved entering into definitive agreements with MUFG Bank Ltd for an investment of Rs. 39,618 crore (USD 4.4 billion ) in SFL through a preferential issuance of equity shares. This investment will result in MUFG Bank acquiring a 20% stake on a fully diluted basis," Shriram Finance had said in a filing last week.

The proposed minority investment by MUFG Bank is subject to shareholder approval, regulatory clearances and customary closing conditions.

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)