6
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 costs.
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.
