Shriram Finance Ltd. share price target

Subdued M&HCV; sales had a bearing on the AUM growth in Q2FY17 from that of the first quarter (growth of mere 0.7%). After looking to push the new vehicle financing at the onset of this fiscal, STFC has restored its spotlight on its core business (used vehicle financing) whose share increased from 89.2% in Q1 to 89.9% in Q2. This restricted further drop in...

SHTFs 2Q earnings met expectations on all fronts. AUM grew ~19% led by sustained momentum in used CVs, even as the new vehicle portfolio saw a sharp drop. PV (25% of AUM) continues to witness strong traction and HCV saw some pick up sequentially. To our surprise, tractors portfolio was flat YoY.

We acknowledge that the company is highly levered to the economy. Yet, given its (a) niche, difficult-to-replicate business model, (b) virtual monopoly in the old vehicle (7+ years vintage) financing business and (c) 15%+ AUM growth rate and 17-19%...

SHTFs 1Q earnings include the CE subsidiary merger and thus, are not comparable. Healthy AUM growth continued ( 23% YoY, 21% ex-merger, an 11-quarter high) with sustained momentum in used CVs. Among segments, PV (24% of AUM) and PVs (~5.6% of AUM) reported strong growth.

NII grew 18% yoy to Rs 13.5bn led by 23% AUM growth and 60bps yoy expansion in NIMs to 7.35%, which in turn was led by lower borrowing costs. AUM growth (Ex Equipment Subsidiary) remained stable at 21% led by HCV (26%yoy), passenger segment(31%),andtractors(24%),evenasM&LCV;declined6%. 9 Disbursementgrewby15%yoyledby62%growthinnewvehiclesand11%growthin...

Shriram Transport is the flagship company of the Shriram group which has a significant presence in consumer finance, life insurance, general insurance and stock broking. It is one of the largest assets financing NBFCs in India and a...

The Company witnessed healthy growth in disbursements in 1QFY17 on account of improvement in new CV demand. AUM for New & Pre-owned CV segment grew by 71.6% yoy (6.2% qoq) & 19.6% yoy (2.5% qoq) to Rs80.4bn & Rs667bn, respectively. Its gross NPA ratio rose marginally to 6.4% in 1QFY17 from 6.2% in 4QFY16 led by higher slippages from Equipment Finance book. As improved outlook on monsoon and uptick in execution of infrastructure projects augur well for the Company, we upgrade our recommendation on the...

9 NII grew 33% yoy to Rs 14.4bn led by 23% AUM growth and 98bps yoy expansion in NIMs to 7.65%, which in turn was led by lower borrowing costs. AUM growth (Ex EquipmentSubsidiary)pickedupto21%ledbyHCV(35%),passengersegment(27%),...

Standalone PAT of Shriram Transport Finance Company's (STFC) was way below ours and street expectations due to 153% yoy and 104% qoq rise in provision expenses that stood at Rs8.6bn. Higher provisioning was primarily due to movement towards 150 day NPA recognition and providing for merged equipment finance loan book. Notwithstanding shifting of GNPA recognition criteria to 150 days from 180 days earlier and merging highly-stressed equipment finance loan portfolio, STFC's gross NPA ratio rose to 6.2% in Mar'16 compared to 4.3% in Dec'15. Relatively lower rise in gross NPA than our expectation and earlier management guidance as well has surprised us positively. Its...

SHTF's 4QFY16 PAT de-grew 54% YoY & 62% QoQ to INR1.43b (49% miss). While the operating profit was in-line with expectation; higher provisions of INR8.6b v/s est. of INR6.1b- led by migration to 150dpd NPL reporting norms...