Lower funding costs to lift returns at India's Shriram Finance, J.P. Morgan says

** J.P. Morgan ("overweight", 1,215 rupees PT) says lower funding costs, benign asset quality should support Shriram Finance's SHMF.NS return on assets

** Expects funding costs to fall 5-10 bps each quarter, declining by 60-70 bps over time following credit-rating upgrades after MUFG investment

** Return on assets may rise to about 3.1% from around 2.8% before MUFG's investment, while return on equity could recover to mid-teens over next five years - JPM

** Adds, faster growth key for re-rating after AUM growth of 15.8% in H1FY27 lagged expectations; expects visibility to improve in H2FY27 as newer businesses scale

** SHMF rated "buy" on avg by 33 analysts, median PT at 1,210 rupees - LSEG-compiled data

** Shares down about 1% at 984.60 rupees

** YTD, stock down 1.61%