Synopsis: Shriram Finance Limited surged 72.40% in 2025, driven by MUFG stake, strong earnings, rising AUM, cost-of-funds improvement, nationwide reach, and bullish broker targets, making it a top Nifty 50 performer.
This NBFC stock, engaged in providing commercial vehicle loans, two-wheeler loans, gold loans, personal loans, MSME finance, and fixed deposits across India, rallied up to 72.40 percent in 2025. In this article, we will explore the reasons for the stock’s rally.
With a market capitalization of Rs. 1,83,442.21 crore, the shares of Shriram Finance Limited closed at Rs. 975.05 per equity share, down nearly 1.79 percent from its previous day’s close price of Rs. 992.80.
Reason Behind the Surge:
Shriram Finance Limited specializes in retail asset financing, offering loans for commercial vehicles, two-wheelers, passenger cars, micro, small, and medium enterprises (MSMEs), gold, and personal needs. Additionally, the company provides fixed deposits, insurance distribution, and digital financial services. In 2025, the stock delivered a remarkable 72.40 percent return, making it one of the top-performing stocks in the Nifty 50 Index. Here are the reasons for the stock’s rally.
Japan’s MUFG Bank, a subsidiary of Mitsubishi UFJ Financial Group, has agreed to invest in India’s NBFC Shriram Finance. MUFG Bank will buy a 20 percent stake through a preferential share allotment. The deal is worth about Rs. 39,620 crore (around $4.3 billion) and will be completed after getting regulatory approvals. The agreement also involves Shriram Finance’s major shareholders, Shriram Ownership Trust and Shriram Capital Private Limited.
Shriram Finance Limited reported a strong rise in revenue from Rs. 10,090 crore in Q2 FY25 to Rs. 11,912 crore in Q2 FY26, showing an increase of about 18 percent year-on-year. The company saw its net profit increase from Rs. 2,153 crore to Rs. 2,314 crore, which is a growth of about 7.5 percent for the same period.
Shriram Finance Limited’s revenue and net profit have grown at a CAGR of 21.55 percent and 30.69 percent, respectively, over the last five years. In terms of return ratios, the company’s ROCE and ROE stand at 11 percent and 15.6 percent, respectively. Shriram Finance Limited has an earnings per share (EPS) of Rs. 52.4, and its debt-to-equity ratio is 3.87x.
Total Assets under Management of Shriram Finance Limited as on 30 September 2025 rose 15.74 percent to Rs. 2,81,309.46 crore, compared with Rs. 2,43,042.55 crore on 30 September 2024 and Rs. 2,72,249.01 crore on 30 June 2025.
Management Guidance:
Shriram Finance Limited management has guided for a 100 bps improvement in cost of funds over the next 2-3 years, driven by a borrowing-cost advantage from gradual liability repricing during this period.
Shriram Finance Limited boasts a pan-India network of 3,225 branches, 78,833 employees, and serves 96.64 lakh customers, ensuring strong reach, steady growth, and stable earnings.
Brokerages remain positive on Shriram Finance Limited, citing strong fundamentals and a steady growth outlook. ICICI Securities has set a target price of Rs. 1,225, implying an upside of 22 percent from the current level of Rs. 1,003.10.
Similarly, Emkay Global Financial Services values the stock at Rs. 1,100, indicating a 9.6 percent upside, while Prabhudas Lilladher has assigned a target of Rs. 1,150, suggesting a potential 14.6 percent gain. Overall, analyst sentiment reflects confidence in the company’s long-term performance.
Shriram Finance Limited has a total assets under management of Rs. 2,81,309.46 crore, with commercial vehicles as the largest segment, accounting for 45.55 percent of AUM, followed by passenger vehicles (21.17 percent) and MSME loans (14.44 percent), which together form the core of its lending business.
Other segments include two-wheelers (5.53 percent), construction equipment (5.46 percent), personal loans (3.75 percent), farm equipment (2.20 percent), and gold loans (1.90 percent), helping the company maintain balanced growth across customer segments.
Geographically, AUM mix in Q2 FY26 is dominated by semi-urban and rural areas (Rs. 1,410.7 bn), followed by urban regions (Rs. 1,074.4 bn), while metro markets (Rs. 328.0 bn) form a smaller but steady share, highlighting its strong presence beyond major cities.
Shriram Finance Limited has a wide branch network of 3,225 branches in Q2 FY26. Of these, 1,771 branches are located in semi-urban and rural areas, followed by 1,140 branches in urban regions and 314 branches in metro cities, highlighting the company’s strong reach beyond major urban centres and its focus on grassroots lending.
Shriram Finance Limited is a major Indian Non-Banking Financial Company (NBFC) primarily engaged in retail asset financing, offering loans for commercial vehicles (especially pre-owned ones), two-wheelers, passenger cars, MSMEs, gold, and personal needs, alongside providing fixed deposits, insurance distribution, and digital financial services, serving a large base of small business owners and individuals across India.
Shriram Finance Limited operates a strong nationwide network with 3,225 branch offices, serving 9.66 million customers. The company is supported by 78,833 employees and a 60,676-member business team, along with 552 rural centres, enabling deep market penetration and efficient customer outreach across India.
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