HDFC Securities' research report on Shriram Transport
SHTF’s 3Q results were a mixed bag. With RBI’s dispensation, GNPA (70bps) and provisions (Rs 3.4bn) were lower. However, SHTF has provided an additional Rs 2.1bn to shore up PCR to 75% (500bps QoQ) - one of the best in its class. With a drop in disbursements led by used CVs, AUM growth was flat QoQ.
OutlookWhile shift to 120/90DPD will lead to rise in NPAs, SHTF is well cushioned with higher coverage. Further, niche business segment, gradual macro healing and falling interest rates augur well for SHTF. Maintain BUY with a TP of Rs 1,366 (2.5x Dec-18E ABV of Rs 547).
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