Newly merged company declared a dividend of ₹ 15 per share; Brokerage sees 24% upside
Shriram Transport (NS:) Finance Company, the largest financier of commercial vehicles, and Shriram City Union Finance (NS:), the largest two-wheeler financer and leader in micro, small and medium enterprise (MSME) lending, have recently been merged to form Shriram Finance Limited. Its shares were trading at ₹ 1350.00 at 01:40 PM on Monday.
The newly merged company informed the exchanges that it has declared an interim dividend at 150% of its face value or ₹ 15 per share for the financial year 2022-23. It has set January 04, 2023 as the record date and said that dividend payout will be made to eligible shareholders on or after Wednesday, January 18, 2023.
Its board has approved higher amounts for the periodical resource mobilisation plan. This includes the issuance of securities viz. redeemable nonconvertible debentures (‘NCDs’)/ subordinated debentures, bonds or any other structured/hybrid debt securities on private placement basis for an amount of up to ₹ 35,000 crores. This will help the company to fund the increased credit demand consequent upon merger of erstwhile Shriram City Union Finance Limited into the company.
Shriram Finance is India’s largest retail NBFC and Kotak Institutional Equities is positive on its shares. It has suggested a buy rating with a price target of ₹ 1675.00, indicating an upside of 24% as compared to its share price.
The brokerage said, “With limited medium-term visibility on product mix, we continue to model mid-teen RoEs.” It added that Shriram’s new business structure will likely encourage its business managers to focus more on regional businesses. This will augur well for personal and enterprise loans as compared to loans to pan-India CV operators.
Written by Simran Bafna
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