6 hrs ago
Shriram Finance Gains 45%, but Analysts Debate Buying Opportunity
Shriram Finance is a company that lends money through its finance business.
Its shares rose strongly over the past year and over the last three and five years.
However, the shares have fallen this year and dropped sharply in September.
One brokerage believes the recent weakness is temporary and recommends buying the stock for the long term.
It expects the company’s assets and profits to grow strongly in the coming years.
Technical analysts are more cautious because the share price is currently moving downward.
They say the stock could recover if it holds important support levels.
But a fall below those levels could lead to more declines.
Investors are therefore weighing strong long-term business prospects against near-term price risks.
Shriram Finance has gained 45.68% over the past year but is down 7.33% year to date.
The stock delivered 146% and 265% returns over three and five years, respectively.
Motilal Oswal Financial Services maintains a buy call with a ₹1,220 target price.
Analysts cite Shriram Finance’s diversified business, resilient asset quality, and strong demand as positives.
Technical analysts warn of further downside if the stock breaks key support levels between ₹900 and ₹850.
- Who
- Shriram Finance, Motilal Oswal Financial Services, Aditya Thukral, and Vipin Kumar.
- What
- Shriram Finance shares have delivered strong long-term returns but declined year to date, prompting differing views on whether they are currently a buying opportunity.
- Where
- The shares trade on the National Stock Exchange.
- When
- The performance data and analysis are reported as of October 2, with the stock’s October 1 close used for the brokerage target.
- Why
- The debate reflects the company’s positive long-term fundamentals and near-term macroeconomic and technical pressures.
Long-Term Bullish View
Near-Term Cautious View
Investment outlook
Long-Term Bullish View
Motilal Oswal Financial Services considers the stock a long-term buying opportunity, citing diversified operations, resilient asset quality, stronger growth capacity, lower incremental funding costs, and product diversification.
Near-Term Cautious View
Technical analysts say the stock remains in a short-term downtrend and that existing investors could consider exiting near resistance before looking to buy again after a confirmed reversal.
Earnings prospects
Long-Term Bullish View
Motilal Oswal expects assets under management to grow at nearly 18% annually and profit after tax at nearly 29% annually over FY26–28.
Near-Term Cautious View
Near-term macro volatility could delay earnings improvement, even if the longer-term business outlook remains intact.
Price direction
Long-Term Bullish View
A recovery from current levels could support a move toward the brokerage’s ₹1,220 target.
Near-Term Cautious View
Aditya Thukral warns that a break below ₹900 could extend the correction toward ₹750, while Vipin Kumar says a decisive fall below ₹850 could drag the stock toward ₹800.
Key facts
- Market capitalization
- ₹2,22,363 crore on the NSE as of October 2
- One-year return
- 45.68% gain
- Year-to-date performance
- 7.33% decline
- Three-year return
- 146% gain
- Five-year return
- 265% gain
- Motilal Oswal target
- ₹1,220, implying about 29% upside from the October 1 close of ₹945
- Key technical levels
- Support near ₹909; broader support at ₹920–₹880, with resistance around ₹1,150–₹1,180
Quotes
Motilal Oswal Financial Services
Domestic brokerage firm covering Shriram Finance
“A break below ₹900 would signal further extension of the signal and would be a worrisome sign for investors. A bounce in the stock price towards the resistance of ₹1,000 should be used as an exit opportunity for longs, as there is a possibility that this correction could extend further towards ₹750”
livemint.com
“several of the company's structural earnings drivers, such as higher growth capacity, lower incremental cost of funds (aided by credit rating upgrade), and product diversification, are only beginning to play out.”
livemint.com
Vipin Kumar
AVP-Research at Globe Capital Market
“Any reversal candlestick with volume support will be a positive development that could lead the stock towards ₹1,040, followed by the upper band resistance of the channel formation. Conversely, a decisive fall below ₹850 will breach the formation on the downside, which could drag it further down towards ₹800”
livemint.com
Sources
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