Shriram Transport Finance - Q1 FY22 Result Report - YES Securities

(Rating: BUY, TP: Rs 1,840, Upside: 32.4%)

Resilient show on both PPOP and Asset Quality

- Used vehicle financing portfolio (90% of AUM) continued to be the main propeller of growth (growing at 12-13% pa), underpinning AUM growth of 2% qoq and 7% yoy. As per management, the demand for used vehicles has remained strong despite Covid and prices of some products have increased further.

- Only 4 ppt increase in PAR 30 portfolio with just 1ppt deterioration in Stage-3 and lower incremental restructuring at 0.5% (incl. expected in Q2) was the key positive highlight. Such asset quality performance was supported by resilient collections (92%/87/94% in April/May/June).

- SHTF has delivered the best results amongst the vehicle finance NBFCs with the display of stark resilience in asset quality. In addition, the buoyancy in used vehicle market and volumes should gradually re-rate the stock from current valuation of 1.5x FY23 P/ABV.

- SHTF remains our top preference within vehicle finance NBFCs and we have a 12m PT of Rs1840. Re-initiation of the merger process with group cos. could create a negative overhang though.

Shares of Shriram Transport Finance Co. Ltd., was last trading in BSE at Rs. 1375.95 as compared to the previous close of Rs. 1391.45. The total number of shares traded during the day was 171350 in over 9411 trades.

The stock hit an intraday high of Rs. 1428.55 and intraday low of 1336.6. The net turnover during the day was Rs. 235218282.

Source : Equity Bulls

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