Buy Shriram Transport Finance; target of Rs 1787: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Shriram Transport Finance has recommended buy rating on the stock with a target price of Rs 1787 in its research report dated July 25, 2018.

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September 18, 2018 / 14:17 IST

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Shriram Transport Finance

SHTF reported healthy net profit of Rs5.7bn (PLe: Rs5.3bn on iGAAP) on the back of lower provisioning on transition to IND AS and benefits accruing from securitization. Historically SHTF maintained higher provision coverage on assets and hence lower Stage 3 provisions under ECL model of IND-AS, translated into lower credit costs of ~200bps for Q1FY19. Key positives were: (i) strong AUM growth of 22% YoY on doubling of new CV disbursements YoY, (ii) stable NIMs and (iii) positive impact on net worth under IND AS. Management expects 20% AUM growth in FY19 with cautiousness on M&HCV demand from Axle Load norms & incremental hardening macro, but NIMs will be steady with overall credit cost coming down.

Outlook

We marginally trim our growth estimate, increase opex and tinker slightly on credit cost increasing our earnings estimates, but we increase our CoE assumptions and hence revise our TP to Rs1,787 (from Rs1,832) based on 2.6x Mar-20 ABV; retain our BUY stance.

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