INSUBCONTINENT EXCLUSIVE:
Antique Stock Broking has a buy call on Shriram Transport Finance Company with a target price of Rs 1,307.
The current market price of
Shriram Transport Finance Company is Rs 1,015.
Time period given by the brokerage is 'long-term' when Shriram Transport Finance Company
price can reach the defined target
Investment rationale by the brokerage-Given the sharp slowdown in sale of MHCVs, rising fuel costs, subdued truck rentals on account of
overloading relaxations and tightening liquidity, SHTF has performed quite well
Now that liquidity situation has improved, possibility of further deterioration in operating performance looks low
However, the key factor would remain the ability to maintain current levels of growth, margins and credit costs in the light of slowing CV
cycle and uncertain growth outlook
Hence, we adopt conservative approach and lower assumptions to AUM CAGR of 13 per cent over FY19-21e, no improvement in margins or credit
In such a scenario, earnings CAGR gets reduced to 13 per cent (19 per cent earlier) and RoEs get capped at 16 per cent
Valuations at 10x current earnings are surely attractive and hence maintain BUY with a target price of Rs 1,307 per share.
