Hold Shriram Transport; tgt of Rs 584: Firstcall Research

Firstcall Research has recommended hold rating on Shriram Transport Finance with a target of Rs 584, in its June 25, 2012 research report.

“Shriram Transport Finance Company (STFC) was established in 1979, headquartered in Mumbai, India provides financial assistance to the commercial vehicles sector. The company is a part of Shriram Group, a prominent player in commercial vehicle financing business, chit funds, consumer finance, life insurance, general insurance, stock broking, property development, project engineering and IT, among others. STFC is the largest player in commercial vehicle finance. It lends finance for preowned trucks to new trucks. Shriram Transport Finance Co Ltd. is the largest asset financing NBFC with Rs. 36086.00 crores ($8.02billion) worth of assets under management. Over the past 30 years, it has developed strong competencies in the areas of loan origination, valuation of pre-owned trucks and collection. STFC has a Pan-India presence with a network of 68 SBUs and 488 branches, and has built a strong customer base of over 7.5 lacs. STFC's product portfolio consist of new truck finance, used truck finance, tyre finance, power finance, franchise finance, truck rentals, personal loans and fixed deposit. The company is a leader in organized financing of pre-owned trucks with strategic presence in 5-12 year old trucks and a market share of 20-25 percent.”

“Shriram Transport Finance Company Ltd has reported net profit of Rs 3080.70 million for the quarter ended on March 31, 2012 as against Rs. 3406.20 million in the same quarter last year, a decrease of 9.56%. Net sales are increased by 10.33% to Rs. 14836.30 million from Rs. 13447.80 million as compared to same quarter last year. Total income has increased to Rs 14854.60 million for the quarter ended March 31, 2012 from Rs. 13874.70 million for the quarter ended March 31, 2011 representing a rise of 7.06%. The EPS of the company is stood at Rs.13.61 per share for the quarter ended March 31, 2012.”

“At the current market price of Rs.521.60, the stock is trading at 8.23 x FY13E and 7.51 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 63.40 and Rs.69.50 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 10% and 9% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 2.42 x for FY13E and 2.23 x for FY14E. Price to Book Value of the stock is expected to be at 1.59 x and 1.31 x respectively for FY13E and FY14E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 584 for medium to long term investment,” says Firstcall Research report.

Institutional holding more than 40% in Indian cos

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