Shriram Finance Limited emerged as one of the standout performers in the Nifty 50 Index during 2025, delivering exceptional returns of 72.40% to investors. The Non-Banking Financial Company, which specializes in retail asset financing across commercial vehicles, two-wheelers, gold loans, personal loans, and MSME finance, closed at ₹975.05 per equity share with a market capitalization of ₹1,83,442.21 crore.

Strategic Partnership Drives Growth

The stock's remarkable performance was significantly bolstered by a major strategic partnership announcement. Japan's MUFG Bank, a subsidiary of Mitsubishi UFJ Financial Group, agreed to invest ₹39,620 crore (approximately $4.3 billion) to acquire a 20% stake in Shriram Finance through preferential share allotment. This landmark deal, pending regulatory approvals, also involves the company's major shareholders, Shriram Ownership Trust and Shriram Capital Private Limited.

Strong Financial Performance

The company demonstrated robust financial growth across key metrics during the reporting period:

Over the past five years, Shriram Finance has maintained impressive growth momentum with revenue and net profit growing at a CAGR of 21.55% and 30.69% respectively. The company's return ratios reflect strong operational efficiency, with ROCE at 11% and ROE at 15.6%. The earnings per share stands at ₹52.4, while the debt-to-equity ratio is 3.87x.

Assets Under Management Expansion

Total Assets under Management showed consistent growth, rising 15.74% to ₹2,81,309.46 crore as of September 30, 2025, compared to ₹2,43,042.55 crore in the previous year and ₹2,72,249.01 crore as of June 30, 2025.

The AUM composition reflects a diversified lending portfolio:

Extensive Network and Market Reach

Shriram Finance operates through a comprehensive pan-India network comprising 3,225 branches supported by 78,833 employees and a 60,676-member business team. The company serves 96.64 lakh customers across the country, with particular strength in semi-urban and rural markets.

Geographically, the AUM distribution in Q2 FY26 shows:

• Semi-urban and rural areas: ₹1,410.7 billion
• Urban regions: ₹1,074.4 billion
• Metro markets: ₹328.0 billion

The branch network mirrors this geographic focus with 1,771 branches in semi-urban and rural areas, 1,140 branches in urban regions, and 314 branches in metro cities.

Management Outlook and Analyst Targets

Management has provided guidance for a 100 basis points improvement in cost of funds over the next 2-3 years, driven by borrowing-cost advantages from gradual liability repricing during this period.

Brokerages maintain positive sentiment on the stock with attractive target prices:

The strong fundamentals, strategic partnership with MUFG, extensive rural and semi-urban presence, and consistent financial performance position Shriram Finance as a compelling investment opportunity in the NBFC space. The company's diversified lending portfolio and deep market penetration across India provide a solid foundation for sustained growth.

Shriram Finance Limited has successfully completed the allotment of equity shares under its Employee Stock Option Scheme, marking another milestone in its employee engagement initiatives. The company's ESOP Allotment Committee approved the allotment of 1,26,275 equity shares to 139 employees on January 9, 2026.

ESOP Allotment Details

The allotment was executed under the Shriram Finance Limited Employee Stock Option Scheme 2023 (No.1), with employees exercising their stock options at a predetermined price. The shares were allotted following the regulatory requirements under SEBI guidelines.

Impact on Share Capital

The allotment has resulted in an increase in the company's paid-up share capital structure. The total issued shares have expanded significantly following this employee stock option exercise.

Regulatory Compliance

The allotment was conducted in compliance with SEBI regulations, specifically under Regulation 30 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, and Regulation 10(c) of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021. The shares have been issued in demat form with distinctive numbers ranging from 1881362102 to 1881488376.

Share Characteristics

The newly allotted equity shares carry the ISIN number INE721A01047 and are identical in all respects to the existing shares of the company. These shares will rank pari-passu with the existing equity shares, ensuring equal rights and privileges for all shareholders. No lock-in period has been specified for these shares, and no additional listing fees are payable for this allotment.

The company has duly informed both BSE Limited and National Stock Exchange of India Limited about this allotment, maintaining transparency with the stock exchanges where its shares are listed.