February 01, 2017 / 12:38 IST
Shriram Transport’s (SHTF) 2Q PAT declined 8% YoY to INR 3.46b (9% below estimate). The miss was primarily on account of higher provisions made during the quarter. While the company availed of the RBI relaxation, it chose to strengthen PCR from 70% to 75% during the quarter. This resulted in a hit of INR 2.13b to the P&L account in the quarter.
OutlookDelayed pick-up in infra activities and sluggish recovery in equipment book are key near-term risks. We cut our FY17-19 estimates by 5-9% to factor in slower AUM growth. The stock trades at 1.7x/1.5x FY18/19E BV. We cut out TP by 4% to factor in EPS cuts to INR 1,225. Buy.
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