Shriram Finance’s stock price hits all-time high after strong third quarter. Should I buy it?

Shriram Finance’s share price rose over 6% to a record high on Monday on the back of a strong performance in the quarter ended December (3QFY24). Furthermore, various securities companies posted their financial results and gave positive evaluations, which also boosted sentiment.

The company’s consolidated net profit increased by 4% from the previous year, INRcompared to $1,873.59 million in the current quarter. INRThe same period last year recorded 1,816,000,000 yen. Meanwhile, net interest income (NII) increased by 17% year-on-year. INR5,274,910,000 INRIn the same period last year, it was $4,511.35 million.

The stock price rose as much as 6.1%, hitting a record high. INR2,448.85 per piece. The stock is currently up 106% from its 52-week low. INRIt’s up 87% over the past year, up about 17% in January 2024 alone, and continues to rise for three consecutive months. Prior to this, the stock had risen 2.3% in December 2023 and 6.7% in November 2023.

The company’s total assets under management also increased by 20% year over year. INR2.14 billion vs. INR1.77 billion as of December 31, 2022, and INR2.02 billion yen as of September 30, 2023.

The asset quality of NBFCs also showed improvement with gross non-performing assets (NPAs) coming down to 5.66% from 5.79% in the previous quarter. Meanwhile, net NPAs for Q3FY24 declined to 2.72% from 3.20% last year.

Brokers also remain positive on the stock, citing strong financial performance, fair valuation, and improving asset quality, with potential for up to 21% post-earnings upside.

morgan stanley has an “overweight” call on the stock, and the target is INR2,700, representing an increase of 17%. MS said solid AUM growth led to a 3% better than expected operating profit before provisioning. He added that there was nothing harsh about the evaluation.

On the other hand, global securities companies HSBC rates the stock as “buy” and sets a target price. INRFrom 2,720 INR2,630. The new price target suggests an 18% upside. The securities firm pointed out that the NBFC, which provides asset financing, fell 5.5% below expectations due to high credit costs. Although operating performance was in line with expectations, HSBC reduced EPS by -2.1%/+3.4%/+ in FY24/FY25/FY26, reflecting higher credit costs and slightly stronger NIM expectations. Tweaked to 2.1 percent.

cityalso maintains a “buy” call with a target. INR2,670, representing an increase of almost 16%. The brokerage said the firm was pleasantly surprised to see that NIM widened to 8.9% for his 8.9%, 60 basis points higher than the previous quarter, despite a slight decline in his PAT in the third quarter. . This was offset by amortization ( INR725 million) and expected credit loss (ECL) allowance ( INR520 million), and credit costs rose to 2.4%, which exceeded management guidance of 2.0%, it added.

Domestic intermediary centrum broking We also maintained a “buy” call with a price target of . INRThis represents an increase of more than 21%. It said strong execution of merger synergies, improving earnings profile and sector tailwinds in asset quality warrant the re-rating.

“Shriram reported strong performance in Q3 2024, supported by solid AUM growth and healthy revenue profile. ROA was 3.3%. NIM (AUM based) improved by 10bps QoQ Operating profit increased 6% sequentially (2.6% above our expectations), while PAT “We are considering this,” the securities company explained.

Disclaimer: The views and recommendations above are those of individual analysts or brokerages and not of Mint. We recommend checking with a certified professional before making any investment decisions.