Nihal PS A Look at the Block Deal
Shriram Finance, a prominent name in the world of finance, recently found itself in the spotlight as its shares experienced a significant 6% surge. This surge was not a random occurrence but a result of a large block deal that took place on the exchanges.
In this block deal, approximately 99.2 lakh shares, constituting a 2.65% stake in the company, were traded. The shares were exchanged at the rate of Rs 1,401.15 per share, leading to a total deal value of Rs 1,390 crore
The Probable Seller: TPG India
While the parties involved in the transaction remained undisclosed initially, the financial news and analysis platform, CNBC-Awaaz, reported that the private equity fund TPG India was the probable seller. If this news holds true, it signifies that TPG India Investments Fund has successfully offloaded its entire 2.65% stake in the company
The Impact of the Block Deal on Shriram Finance
The block deal had a notable effect on the trading volume of Shriram Finance shares. The volume experienced a sudden surge, with one crore shares changing hands on the exchanges. This was a significant increase compared to the one-month daily traded average of eight lakh shares
Simultaneously, Shriram Finance’s shares were trading at Rs 1,472.90 at 09.41 am, marking a 5.1% rise on the National Stock Exchange. The shares even touched an intraday high of Rs 1,500.90
Shriram Finance’s Performance
The block deal coincided with Shriram Finance’s impressive performance in the January-March quarter. The company recorded a consolidated net profit of Rs 1,288 crore, marking an 18% increase compared to the same period the previous year. For the fiscal year 2023, the company’s profit stood at Rs 6,020 crore, showing a steep 122% surge compared to the Rs 2,721 crore in FY22.
A Glimpse into the Past
It’s worth noting that this isn’t the first time a significant block deal has taken place involving Shriram Finance. In 2015, Apax acquired a stake in Shriram City from TPG. Post the merger of Shriram City and Shriram Transport, Apax held a 4.63% stake in Shriram Finance, the merged entity
The Future Outlook
The brokerage firm YES Securities believes that the current valuation of Shriram Finance is undemanding based on its FY25 estimates. This makes a strong case for a re-rating given the sustained AUM (Assets Under Management) growth rate and improvement in asset quality
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