Stock to Buy: NBFC stock that can deliver returns of 36%; Recommended by ICICI Securities

Synopsis:- The NBFC is gaining traction after multiple Buy calls, with a target of ₹1,225, implying 36% upside. Strong institutional backing, a $4.4 billion capital infusion, 15.7% AUM growth, and steady Q2 performance continue to improve long-term growth visibility.

Non-banking Financial Companies from a vital alternative credit channel in India, with total credit reaching about Rs 48 trillion in FY25 and a 22% share of the overall credit market. Around 9,300- 9,400 NBFCs are registered with the RBI, and the sector credit has grown at nearly 14% CAGR between FY20-FY25, outpacing banks while deepening Financial inclusion.

With a market capitalisation of Rs 1,76,942.11 crore, the shares of Shriram Finance Ltd were trading at Rs 940.50 per share, increasing around 4.30 percent as compared to the previous closing price of Rs 901.75 apiece.

Brokerage Recommendations

ICICI Securities, one of the well-known brokerages in India, has given a ‘Buy’ recommendation on the NBFC stock with a target price of Rs 1,225 apiece, indicating a potential upside of 36.

percent from the previous closing price of Rs 901.75 per share. The recommendation indicates improving visibility and favourable risk-reward for investors at the current level.

Shriram Finance’s $4.4 billion deal with Japan’s MUFG marks a watershed moment, becoming the largest transaction ever in Indian financial services and pushing 2025 deal value beyond $11 billion. The strategic capital infusion has prompted analysts to turn more bullish, reflecting confidence in the company’s long-term growth and balance-sheet strength.

Furthermore, Nomura has maintained its buy recommendation, and it expects the deal to drive a sharp improvement in growth visibility, with AUM growth upgraded to 20% from 17%. While RoE may dilute marginally by 3.4 basis points, BVPS accretion of 24% and RoA expansion to 3.7% are positives.

Additionally, CLSA has also maintained an “outperform” rating. It believes the capital raise will lower funding costs and improve profitability over time. Despite lower leverage, CLSA expects mid-teen RoE and has raised FY27 and FY28 profit estimates by 12% and 25%. However, 38 analysts have coverage on Shriram Finance now, of which 34 have a “buy” rating, 3 say”hold”, meanwhile one has a “sell” rating on the stock.

Financial & other Highlights

The company delivered a steady Q2FY26 performance, with revenue jumped by 18 percent from Rs 10,090 crore in Q2FY25 to Rs 11,912 crore in Q2FY26, reflecting healthy business momentum. Further, during the same time frame, net profit grew a modest by 7 percent to Rs 2,314 crore, indicating stable earning growth.

Shriram Finance AUM grew 15.7 percent to Rs 2.81 trillion, reflecting steady loan growth. Asset quality was mixed, with gross stage-3 asset marginally improving, while net stage-3 rose 10.1%. Book value increased 15.8 percent to Rs 321, supporting long-term shareholder value despite some credit cost pressure.

Shriram Finance Ltd focused on retail lending. It serves customers across vehicle finance, MSME loans, personal finance and deposits. With a strong rural and semi-urban presence, the company combines scale, asset quality focus, and steady profitability.

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