Goldman Sachs upgrades Shriram Trans Fin on growth prospect

Moneycontrol Bureau

Goldman Sachs has upgraded Shriram Transport Finance to buy from neutral but lowered target price to Rs 1000 from Rs 1075 per share. The brokerage says that Shriram Transport Finance has underperformed Bank Nifty by 20 percent-30 percent over the last 3 months/3 year which provides an attractive entry opportunity.

It also adds that return on assets may improve to 2.94 percent by FY18 as it has bottomed out. “Market concerns on Shriram’s equipment finance subsidiary are exaggerated (contributes only 3 percent of net worth). With the road ahead likely to be less bumpy as macro and industrial activity gradually recover, positively affecting growth and credit costs, we upgrade it,” it says in a report.

The non-banking finance company's January-March quarter consolidated profit fell 73.3 percent year-on-year to Rs 84.23 crore, impacted by higher provisions.

Net interest income grew by 13.3 percent to Rs 1,105.6 crore for the quarter ended March 2015 from Rs 976 crore in the same quarter last year. Provisions for bad loans jumped 80.4 percent to Rs 573 crore during January-March quarter from Rs 317.61 crore in the year-ago period.

At 09:32 hrs the stock was at Rs 818.00, up Rs 5.35, or 0.66 percent on the BSE.