Time to buy Commercial Vehicle Financiers (!)

If you are shopping for a NBFC or Bank stock you have to consider CV financiers.

There is a recent report by Religare which highlights the fact that CV lenders are "gearing up for a joyride". The premise of the report is that the worst cycle for CV/CE lenders in the last 20 years is coming to an end and that a "strong cyclical upturn coupled with lower fuel and funding costs could turn FY17 into a bumper year".


The best CV financier of the lot appears to be Cholamandalam. According to Religare, it has the highest upside of the other three financiers, Shriram Transport, SCUF and M&M Finance.

Chola is a favourite amongst savvy investors like Akash Prakash, Renuka Ramnath and Brahmal Vaudevan.

Dipen Sheth of HDFC Sec also recommended Chola recently on the ground that it is a "quality business" and has the potential to give 2x or 3x returns in the next couple of years.

So, my question is:

(i) Are you a believer in this theory that the CV cycle will change?;

(ii) If so, do you have any stocks which will benefit from the CV Cycle?;

(iii) If not, are you taking pro-active steps to address the situation?;

(iv) If so, what stocks are you buying?

In my view, we cannot remain mute spectators to everything that is going on around us. We need to take a stand and agree or disagree with the theory and take proactive steps. If not, we will be left behind.

 

I am setting out here the stock prices so that we can keep a hawk-eye on these stocks:

(As of 03.04.2015)

Chola Rs. 595 (P/BV 3.73)
SCUF Rs. 1981 (P/BV 4.49)
Shriram Transport Rs. 1146 (P/BV 3.14)

Tata Motors DVR Rs. 338 (P/E: -)
Ashok Leyland Rs. 74 (P/E 45)