Shriram Transport Finance’s new initiatives—facilitating CV purchases and refurbishing vehicles (available in the open market) to sell for a profit—have progressed well. This demonstrates the economic benefits of its strong franchise in its chosen segment of borrowers and the niche asset class. With fee income expected to double in FY11, a buoyant loan growth scenario, 40% of AUM securitised at attractive spreads, and abundant liquidity aiding the liability side of the balance-sheet, Shriram Transport Finance’s business appears robust. Valuation multiples of Shriram Transport Finance reflect the strong momentum and high RoE, but valuations are still significantly below historical highs. We retain BUY.