Axis Direct recommended hold rating on Shriram Transport Finance with a target price of Rs 1040 in its research report dated February 07, 2017.
Axis Direct's research report on Shriram Transport Finance
Though mgmt seems optimistic on growth, we expect it to be challenging on the backdrop of rising competition from banks, NBFCs and new players (SFBs). NIMs may face pressure due to higher demand from low-yielding assets. Transition to 90 dpd by FY18 to be another challenge. We hence cut our FY17/18 estimates by 9%/8% and value SHTF at 2.3x FY18E P/ABV (vs. 2.6x earlier). At CMP, SHTF trades at 2.2x/2.1x FY17E/FY18E ABV of Rs 427/Rs 449, respectively.
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