Shriram Transport Finance Co Research Report By Nirmal Bang

SHTF’s core earnings (+11% YoY) and operating profits (+9% YoY) were in line with estimates. However, higher provisions (ann. 2.3%) led to the PAT (+3% YoY) coming in marginally below estimates. Key positives include third consecutive quarter of NIM improvement, stable asset quality and improving growth trends. SHTF is at the inflexion point and remains the preferred play on the anticipated CV cycle revival. Further positives are improving macros, falling interest rates and a better earning profile of its borrowers. We thus expect SHTF’s RoA to inch back to +3.1% from 2.5/2.9% in FY15E/14. Niche business segment (used CVs), higher market share and a well cushioned B/S (CRAR: 21% & PCR: 80%) too provide comfort. Maintain BUY with a TP of Rs 1,248 (2.3x FY17E ABV).

Download Shriram Transport Report By HDFC Sec