Shriram Finance shares: Key reasons why this stock is falling; outlook, target price
SHFL shares have corrected 11% over the past month amid a mix of factors, including renewed escalation in the West Asia conflict, a sharp rebound in crude prices, elevated bond yields and weaker-than-expected monsoons.
- Sep 30, 2026,
- Updated Sep 30, 2026 8:10 AM IST
MOFSL on Wednesday said it remained constructive on the medium-term earnings trajectory of Shriram Finance Ltd (SHFL), even as the stock has come under pressure from near-term macro factors. The brokerage said the recent fall in the stock price was being driven largely by cyclical and external developments, while the company’s structural earnings drivers were only beginning to play out.
SHFL shares have corrected by around 11 per cent over the past month amid a mix of factors, including renewed escalation in the West Asia conflict, a sharp rebound in crude prices, elevated bond yields and weaker-than-expected monsoons. MOFSL, however, reiterated its BUY rating on the stock with a target price of Rs 1,220, based on 2.2 times estimated FY28 book value per share.
The brokerage said three structural drivers support its positive view on SHFL. They are diversification, lower funding costs and operating leverage. It forecast 18 per cent asset under management (AUM) CAGR and 29 per cent PAT CAGR over FY26-28, with return on asset (RoA) improving to 4 per cent by FY27/FY28.
According to MOFSL, the stock is currently being impacted by factors that are largely macro and near-term in nature, while several of the company’s structural earnings drivers, including higher growth capacity, lower incremental cost of funds aided by a credit rating upgrade, and product diversification, are only beginning to play out. It said near-term macro volatility could delay the pace of earnings improvement, but did not alter the medium-term earnings framework. MOFSL said a stronger capital base, a broader product franchise and structurally improving borrowing costs should help SHFL compound earnings as operating conditions normalise.
MOFSL said the macro backdrop had turned more challenging, but it viewed the current pressure as cyclical. It said higher crude prices, elevated bond yields and uneven monsoon trends could weigh on rural cash flows and transporter incomes in the near term. At the same time, it said SHFL’s diversified franchise, resilient asset quality and strong underlying demand provide a cushion against these headwinds.
The brokerage said that while commercial vehicles remain the anchor business, new-vehicle financing, MSME and gold are emerging as meaningful incremental growth engines. It noted that new-vehicle financing has already risen to around 16 per cent of disbursements from around 10 per cent earlier, with management targeting 20-25 per cent over the next two to three years. MOFSL said it estimates an 18 per cent AUM CAGR over FY26-28.
On the monsoon front, MOFSL said rainfall trends had added another layer of uncertainty. It said cumulative rainfall year-to-date was around 12 per cent below the long-period average, while the spatial distribution of rainfall suggested drought-like situations in certain states, including Maharashtra and Bihar. According to the brokerage, these factors could have a second-order impact on rural cash flows, agricultural activity and transporter incomes, even as it maintained that SHFL’s medium-term earnings outlook remained intact.
MOFSL on Wednesday said it remained constructive on the medium-term earnings trajectory of Shriram Finance Ltd (SHFL), even as the stock has come under pressure from near-term macro factors. The brokerage said the recent fall in the stock price was being driven largely by cyclical and external developments, while the company’s structural earnings drivers were only beginning to play out.
SHFL shares have corrected by around 11 per cent over the past month amid a mix of factors, including renewed escalation in the West Asia conflict, a sharp rebound in crude prices, elevated bond yields and weaker-than-expected monsoons. MOFSL, however, reiterated its BUY rating on the stock with a target price of Rs 1,220, based on 2.2 times estimated FY28 book value per share.
The brokerage said three structural drivers support its positive view on SHFL. They are diversification, lower funding costs and operating leverage. It forecast 18 per cent asset under management (AUM) CAGR and 29 per cent PAT CAGR over FY26-28, with return on asset (RoA) improving to 4 per cent by FY27/FY28.
According to MOFSL, the stock is currently being impacted by factors that are largely macro and near-term in nature, while several of the company’s structural earnings drivers, including higher growth capacity, lower incremental cost of funds aided by a credit rating upgrade, and product diversification, are only beginning to play out. It said near-term macro volatility could delay the pace of earnings improvement, but did not alter the medium-term earnings framework. MOFSL said a stronger capital base, a broader product franchise and structurally improving borrowing costs should help SHFL compound earnings as operating conditions normalise.
MOFSL said the macro backdrop had turned more challenging, but it viewed the current pressure as cyclical. It said higher crude prices, elevated bond yields and uneven monsoon trends could weigh on rural cash flows and transporter incomes in the near term. At the same time, it said SHFL’s diversified franchise, resilient asset quality and strong underlying demand provide a cushion against these headwinds.
The brokerage said that while commercial vehicles remain the anchor business, new-vehicle financing, MSME and gold are emerging as meaningful incremental growth engines. It noted that new-vehicle financing has already risen to around 16 per cent of disbursements from around 10 per cent earlier, with management targeting 20-25 per cent over the next two to three years. MOFSL said it estimates an 18 per cent AUM CAGR over FY26-28.
On the monsoon front, MOFSL said rainfall trends had added another layer of uncertainty. It said cumulative rainfall year-to-date was around 12 per cent below the long-period average, while the spatial distribution of rainfall suggested drought-like situations in certain states, including Maharashtra and Bihar. According to the brokerage, these factors could have a second-order impact on rural cash flows, agricultural activity and transporter incomes, even as it maintained that SHFL’s medium-term earnings outlook remained intact.