ICICI Securities Recommends Buy on Shriram Finance; Target Rs 1225

• ICICI Securities maintains 'Buy' rating on Shriram Finance (SFL) with a target price of Rs 1225.
• SFL aims for 100bps reduction in cost of borrowing over 2-3 years, accelerating credit growth to 20% in five years.
• Expects 10-20bps reduction in credit cost due to better customer profile and focus on low-risk products like new vehicles and gold loans.
• Long-term Return on Assets (RoA) projected to expand to 3.6% from current 2.7-2.8%.
• SFL plans to double its new vehicle portfolio (currently 3%) over the next three years, focusing on existing customers.

Why It Matters: Shriram Finance poised for leadership with improved profitability and accelerated credit growth.