Buy Shriram Transport; target of Rs 1705: Prabhudas Lilladher

Prabhudas Lilladher's research report on Shriram Transport

SHTF's earnings were in-line with estimates with PAT of Rs4.95bn (PLe: Rs4.99bn). The main highlight was strong AUM growth of 18% YoY, much better than expectations led by new vehicle financing which kept margins stable despite benefit from cost of funds. Asset quality broadly remained stable but will management guided 120bps increment from current levels on moving to 90dpd and stability will be seen from H1FY19 end onwards.

Outlook

We revise our growth estimates upwards to 17-18% over FY18-FY20 with slight margin tailwind but asset quality remains uncertain and hence we retain our credit cost estimates at 260-280bps. Retain BUY with revised TP of Rs1,705 (up from Rs1402) based on 2.6x (from 2.3x) Sep-19 ABV. For all recommendations report, click here

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