Motilal Oswal's research report on Shriram Transport Finance
PAT declined by 11% QoQ to INR9.65b (in line) in 1QFY23, driven by a sequentially higher credit costs of ~2.5% and a NIM decline of ~20bp QoQ. Price hikes in both New and Used CVs (led by the shift to BS-VI emission standards and higher steel prices) has continued to feed into higher ticket sizes and are aiding disbursements, which grew 31% YoY to ~INR117b. SHTF’s customers and products operate in a benign competitive landscape. It has the pricing power to pass on the higher incremental cost of borrowings to its customers. We estimate a compression of ~20bp in NIM over the next two years.
We maintain our Buy rating with a TP of INR1,690 per share (based on 1.4x FY24E BVPS).
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