Stocks to Buy: Recommendations by Shrikant Chouhan of Kotak Securities
Shriram Finance – Add
CMP – ₹935
FV – ₹990
Resistance – ₹960/990
Support – ₹915/885
The company’s core portfolio comprises used commercial vehicle loans, passenger vehicle loans, Micro, Small and Medium Enterprises of India (MSME) loans, personal loans, gold loans, and consumer finance. Used CV financing remains the largest contributor, offering structurally higher yields due to limited formal competition and superior risk-adjusted returns. Increasing diversification into MSME and personal loans provides incremental growth while moderating cyclicality.
Shriram Finance has a pan-India presence with a stronghold in South India, complemented by expanding traction in western and northern states. Its extensive branch network and feet-on-street model allow superior sourcing, collections, and customer retention, particularly in semi-urban and rural markets where large banks have limited reach.
The company continues to deliver steady asset under management (AUM) growth supported by healthy disbursements and stable credit demand. Asset quality remains resilient, with gross non-performing asset (GNPA) and net non-performing asset (NNPA) ratios trending down and credit costs normalising post-Covid. Strong yields, improving operating leverage, and disciplined cost control have supported robust return on assets (RoA) and return on equity (RoE), placing Shriram Finance among the most profitable large NBFCs. Capital adequacy remains comfortable, providing headroom for growth without balance sheet stress.
With improving asset quality, stable margins, and the strategic backing of MUFG, Shriram Finance is well-positioned to compound earnings across cycles. The company offers a compelling play on India’s underpenetrated retail credit market with strong execution visibility and improving institutional confidence.
VBL – Add
CMP – ₹487
FV – ₹550
Resistance – ₹500/520
Support – ₹475/460
New growth engines include: (1) an exclusive distribution tie-up with Carlsberg for beer in select African markets, (2) its intent to enter the Alcobev segment in India and (3) foray into the Kenyan beverages market. These new growth engines, coupled with the PepsiCo snacks opportunity in Africa, are medium-term value creation levers Twizza would contribute 4 per cent/5 per cent/3 per cent to VBL’s consolidated revenues/volumes/Ebitda (Earnings before interest, tax, depreciation and amortisation). South Africa (BevCo + Twizza) would account for about 17%/50% of consolidated/overseas volumes. We expect this acquisition to be marginally earnings per share (EPS)-accretive from Year 1.
Following a massive ₹7,500 crore fundraise via qualified institutional placement (QIP), VBL has moved from a 1.0 times Debt/Equity ratio to being virtually net debt-free, providing a “war chest” for further acquisitions. The primary risks are the intense competition in India (e.g., Reliance’s Campa Cola) and erratic weather patterns that directly impact summer consumption. VBL indicated that it is open to respond to Campa with ₹10 stock keeping unit (SKU), if needed, to defend its share. We expect a stronger competitive response from PepsiCo/Coca Cola in CY2026/27E amid Campa’s significant capacity ramp-up.
(Disclaimer: This article is by Shrikant Chouhan, head of equity research, Kotak Securities. Views expressed are his own.)
