Shriram Finance (SHRIRAMFIN)

FairStock Score: 63/100 — STEADY

Score breakdown: P/E: 1/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• Revenue growth of 13.76% with latest quarter sales of ₹12,171 Cr and net profit of ₹2,530 Cr shows meaningful scale.
• ROE of 15.09% and ROCE of 10.95% indicate reasonable capital efficiency.
• Piotroski F-Score of 7/9 and Altman Z-Score of 29.91 point to low financial distress.
• Current ratio of 66.17 suggests strong short-term liquidity as reported.
• Book value of ₹322.09 per share provides an asset base under the business.

Concerns

• Profit growth is negative at -3.25%, yet the stock trades at a P/E of 22.20 and P/B of 3.13.
• Price of ₹1,009.30 is far above the Graham Number of ₹593.66, leaving a negative margin of safety; PEG of 4.26 reinforces expensive valuation.
• Free cash flow is deeply negative at -₹40,022 Cr, indicating heavy capital consumption.
• Promoter holding of only 20.30% is low for an Indian financial institution, reducing ownership alignment.

AI Analysis

Shriram Finance has the look of a decent franchise, but at the current price, the arithmetic does not excite me. It sells at ₹1,009.30 with a market cap of ₹2.03 lakh crore. A 13.76% sales growth and a latest quarter of ₹12,171 crore revenue and ₹2,530 crore profit show real operating scale. Yet full-year profit fell 3.25%, and with a P/E of 22.20 and P/B of 3.13, I am being asked to pay a generous multiple for a lender that has not increased earnings. Graham would compare the price to the Graham Number of ₹593.66; at ₹1,009.30, there is no margin of safety—it is negative. ROE of 15.09% is satisfactory but not extraordinary. The balance sheet appears stable on limited data: Altman Z-Score of 29.91 and current ratio of 66.17 are very strong, and Piotroski F-Score of 7/9 suggests healthy fundamentals. However, free cash flow is -₹40,022 crore; in a financing business that can simply reflect loan growth, but it still demands capital. Debt/equity of 0.00 is strange for an NBFC, so I would want to understand the true leverage before trusting the surface numbers. Dividend yield of 0.92% gives little compensation while waiting. Promoter holding of 20.30% is low; I prefer owners to have more at stake. At PEG of 4.26, my required return is not met. The company is not a bad business; it is a case of price exceeding intrinsic value. I would wait for a lower price, or for a sustained track record of profit growth to justify the multiple. For now, it is a slow grower selling like a fast grower.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer