Hold Shriram Trans; target of Rs 1010:Edelweiss

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Edelweiss's research report on Shriram TransShriram Transport Finance’s (SHTF) Q3FY16 PAT (standalone) at INR3.75bn (up 20% YoY) was marginally better than our estimate (INR3.6bn) on better-than-expected revenue traction. AUM growth continued to gather momentum, registering >16% YoY growth following >18% growth in used commercial vehicles (CVs, particularly in HCVs). This, along with >30bps QoQ improvement in NIMs (calc), fed into better revenue momentum. Asset quality remained soft with NPLs rising in CV financing (to 4.3% on 180dpd) and slower improvement in construction equipment business (INR10.5bn versus INR11bn in Q2FY16). Growth trends are improving (management is confident of tracking >15% growth in FY16/FY17). However, due to prevalent tough operating environment, gradual transition to 90-dpd norms and slower than anticipated recovery in equipment finance unit, credit cost will stay elevated. We expect RoE to be capped at <16% and maintain ‘HOLD’. Though we like SHTF’s sound business model, product niche and geographical depth, asset quality stress in near term and slower rural demand keeps us guarded. We roll forward to FY18E and maintain ‘HOLD/SP’ with TP of INR1,010. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Read More