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Systematix Research Report
The board of Shriram Group announced the merger of Shriram Capital Ltd. and Shriram City Union Finance Ltd. with Shriram Transport Finance Company Ltd. to form Shriram Finance Ltd. - the largest retail financing non-banking financial company catering to India’s unbanked and underbanked customer segments through 3,500 plus branches and ~50,000 plus employees.
We remain sanguine about a strong disbursement run rate in H2 FY22E and the normalisation of credit costs in FY23E.
Shriram City’s competitive strength lies in its in-house origination, appraisal and collections process. It is also one of the largest two-wheeler loan originators with 6,000 plus dealer relationships.
While merger synergies for customers would accrue over three to five years, we remain upbeat about credit rating upgrades for Shriram City and Shriram Transport Finance due to the diversification.
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