CRISIL Equities assigns fundamental grade ‘3/5’ to Shriram City Union Finance

Credit rating agency, CRISIL Equities has assigned a CRISIL IER fundamental grade of '3/5' to Shriram City Union Finance (Shriram City). The grade indicates that the company's fundamentals are ‘good’ relative to other listed equity securities in India. The agency has also assigned a valuation grade of 4/5, indicating that the market price has an ‘upside’ from the current levels.

The grade is constrained by Shriram City’s geographic concentration - almost 90% of AUM in South India and Maharashtra. CRISIL expects it will maintain this rate over the medium term although the company is diversifying to other regions. Though Shriram City has managed its asset quality well despite exposure to clients with low access to credit, the ability to continue to maintain the same is a key monitorable. Also, the company’s ability to expand outside the group’s network in other regions is a key monitorable.

Shriram City Union Finance, part of Chennai-based Shriram group, has a comprehensive range of financing two wheelers, three wheelers, four wheeler finance, personal loans and loan against gold. With over 1000 business outlets across the country, the company enjoys a high credit rating.