Prabhudas Lilladher is bullish on Shriram Transport Finance has recommended buy rating on the stock with a target price of Rs 1822 in its research report dated April 27, 2018.
Prabhudas Lilladher's research report on Shriram Transport Finance
SHTF reported modest net profit of Rs1.4bn which was below estimate (PLe: 3.3bn) on the back of higher provisioning on transition to 90dpd recognition. Provisions were higher than expectation as the company continued to maintain higher provision coverage on assets in view of uncertainty on IND-AS transition for NBFCs while they await clarity on its applicability to take a view on maintaining the PCR and credit cost. Key positives were strong AUM growth of 21% YoY on strong 44% YoY disbursement, stable NIMs and increased presence. Management expects 20% loan growth in FY19 and stable NIMs, but remain uncertain on the provisioning which is expected to reduce gradually.
Outlook
We retain our BUY stance with revised TP of Rs1,832 (up from Rs1,705) based on 2.6x Mar-20 ABV (rolled over from Sep-19).
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