Shriram Transport climbs 9% after Q1 nos beat estimates; Morgan Stanley sees 46% upside

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26 Aug, 2025 12:21

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Shriram Transport Finance Corporation shares rallied 9 percent intraday on July 25 as its June quarter earnings beat analyst expectations despite slowdown and election period.

Profit grew 10.9 percent year-on-year to Rs 634.3 crore and net interest income increased 7.7 percent to Rs 1,961.7 crore in the quarter ended June 2019.

Operating profit grew 9.8 percent year-on-year (up 2 percent QoQ) to Rs 1,542.8 crore in Q1. Capital adequacy ratio also inched up to 20.1 percent at the end of June quarter against 16.9 percent in the previous year.

While having overweight call on the stock with a target price at Rs 1,350 (implying 46 percent potential upside from current levels), global investment firm Morgan Stanley said numbers were in-line with its estimates as profit was marginally better than expectations.

Asset under management growth moderated and NIM saw some compression, which was largely expected by Street. Asset under management growth at 5.8 percent YoY was lowest in the last 10 quarters.

Disbursements fell 8.4 percent YoY (up 2.8 percent QoQ), and net interest margin contracted 6bps sequentially to 7.16 percent due to excess cash of Rs 6,579.5 crore i.e. 2 months disbursements kept as cash by the management.

But it was heartening to see disbursements to AUM ratio improving to 15.1 percent at the end of June quarter against 5.6 percent in the March quarter.

The brokerage said there was a slight hiccup in asset quality. Gross non-performing assets as a percentage of gross advances rose by 150bps sequentially to 8.52 percent and net NPA increased 48 bps to 5.97 percent in June quarter.

The stock was quoting at Rs 974.85, up Rs 48.55, or 5.24 percent on the BSE at 1104 hours IST.

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