26 October 2018 Shriram Transport Finance (SHTF) reported 2QFY19 PAT at INR6.1b, 5% ahead of our estimate (22% YoY growth), helped by strong AUM growth and slight improvement in NIM. Disbursements were up 12% YoY to INR138b; however, used vehicle disbursement growth was moderate at 8%. AUM grew 21% YoY to INR1.05t, led by strong growth across all segments. The used commercial vehicle (CV) loan book grew 15% YoY while the new CV segment and other segment registered robust growth of 46% YoY. Reported margins were up 5-10bp both QoQ and YoY. C/I ratio came in ~100bp higher on a YoY basis at 22%. Gross Stage 3 loans declined 1% YoY to INR91b (8.7% of AUM v/s 9.1% in the previous quarter). However, credit costs for the quarter came in at INR6.8b v/s our expectation of INR5.3b. management, bank lending to the NBFC space is still sluggish.