Buy Shriram Transport; target of Rs 702: Firstcall Research

Firstcall Research is bullish on Shriram Transport Finance Corporation and has recommended buy rating on the stock with a target of Rs 702 in its November 1, 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 pre-owned 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 Shriram Transport is today the largest asset financing NBFC in the country and holistic finance provider for the commercial vehicle industry and seeks to partner small truck owners for every possible need related to their assets. It has PAN India presence with 502 branch offices. Based at Mumbai, it manages assets over Rs 40,000 crores and has a live customer base exceeding 8,50,000. 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.”

“At the current market price of Rs.615.40, the stock P/E ratio is at 9.99 x FY13E and 9.39 x FY14E respectively. Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs.61.63 and Rs.65.55 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 11% and 6% over 2011 to 2014E respectively. On the basis of EV/EBITDA, the stock trades at 3.21 x for FY13E and 2.96 x for FY14E. Price to Book Value of the stock is expected to be at 1.89 x and 1.57 x respectively for FY13E and FY14E. The second quarter witnesses a healthy increase in overall sales as well as profitability on account of powerful combination of exciting products, an enhanced store network and robust infrastructural Support system. We expect that the company surplus scenario is likely to continue for the next three years, will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 702 for medium to long term investment,” says Firstcall Research report.

Non-Institutions holding more than 90% in Indian cos

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