Buy Shriram Transport Finance; target of Rs 1575: Motilal Oswal

Motilal Oswal's research report on Shriram Transport Finance

SHTF’s PAT declined 17% YoY to INR7.3b (8% miss) in 3QFY21. In 9MFY21, NII and PPOP were largely flat on a YoY basis, while PAT declined 24% due to elevated credit costs. n We increase our FY22E/FY23E EPS estimate by ~7%/~5% to factor in higher AUM and lower opex. Our FY21E/FY22E/FY23E credit cost estimate stands at 2.8%/2.4%/2.5%. Buy with a TP of INR1,575/share at 1.4x FY23E P/BV.

Outlook

We upgrade our FY22E/FY23E EPS estimates by ~7%/~5% on the back of better loan book growth and lower opex. Maintain Buy with a TP of INR1,575 per share at 1.4x P/BV (FY23E).