The correction in Shriram Transport Finance Corporation in early trade was after SVL Ltd, the holding company of Shriram group's non-financial business, was admitted into the bankruptcy process by the National Company Law Tribunal.
Shriram Transport Finance Corporation share price fell nearly 4 percent in early trade but managed to recoup those losses to rally more than 4 percent intraday on Friday, after the management clarified on SVL case.
The stock price was quoting at Rs 1,217.50, up Rs 42.35, or 3.60 percent on the BSE, at 13:58 hours IST while Shriram City Union Finance was down 0.85 percent to Rs 1,896.85.
The correction in early trade was after SVL Ltd, the holding company of Shriram group's non-financial business, was admitted into the bankruptcy process by the National Company Law Tribunal.
In addition, global brokerage house Credit Suisse in its note said the company would lose control over assets and operations to interim resolution professional (IRP).
Likelihood of corporate guarantees issued supporting SVL bonds are getting invoked, it said while raising credit cost estimates & cutting growth expectations.
The research house also reduced its FY19-21 EPS estimates by 8-17 percent followed by cut in target price to Rs 1,250 from Rs 1,500 per share. It has Neutral rating on the stock.
But Umesh Revankar, Managing Director & CEO, Shriram Transport Finance in an interview to CNBC-TV18 clarified on the above subject, saying the amount involved in SVL case is unlikely to have meaningful impact on P&L of the company.
“This is between one of the subsidiaries of SVL and the customer of that company. There is some business dispute and the amount should be very small. I think the original amount is around Rs 6 crore. So that much I can tell you. More details are available in National Company Law Tribunal (NCLT), you can refer that because the full information is available in the public domain,” Revankar explained.“SVL was able to handle the dispute, the original amount is very small. I don't think it has anything to do with our guarantee to SVL. That will be addressed by SVL themselves,” he added.