Shriram Transport Finance Company (BOM:511218)

QUOTE AND NEWS
Reuters  Mar 4  Comment 
India's largest commercial vehicle financier, Shriram Transport Finance Company Ltd , plans to expand its nascent car lending portfolio to cover the entire country over the next 18 months as its core market continues to struggle amid a slowing...
The Hindu Business Line  Jan 29  Comment 
Shriram Transport Finance Company (STFC) has posted a 13 per cent drop in its third quarter consolidated net profit as finance costs rose sharply for the commercial vehicle financier. Th...
The Hindu Business Line  Dec 6  Comment 
To beat the slowdown in the heavy vehicles segment, Shriram Transport Finance Company is looking to provide loans to a new segment — buying used cars. The company, which mainly gives loan...
The Hindu Business Line  Sep 30  Comment 
Shriram Transport Finance Company has said that it intends to raise Rs 250 crore by issuing non-convertible debentures (NCD) of face value of Rs 1,000 each.The minimum amount that a retail i...
The Hindu Business Line  Jul 23  Comment 
Shriram Transport Finance Company (STFC) posted a seven per cent increase in its first quarter consolidated net profit helped by higher interest income earned by the company. The asset fi...
The Hindu Business Line  Jul 23  Comment 
The Hindu Business Line  Jul 12  Comment 
Shriram Transport Finance Company Ltd plans to get into insurance broking, “as it has a huge customer base to capitalise on”. According to Umesh Revankar, Managing D...
The Hindu Business Line  May 10  Comment 
Piramal Enterprises Ltd has bought 2.28 crore equity shares of Shriram Transport Finance Company Ltd (STFC) in a block deal valued at Rs 1,652 crore. The company has paid Rs 723 per shar...
The Economic Times  May 10  Comment 
Shares of Shriram Transport Finance Company rallied over 5 per cent in intraday trade soon after ET Now broke the news.
The Hindu Business Line  May 7  Comment 
Shriram Transport Finance Company has posted a 17 per cent increase in its fourth quarter consolidated net profit helped by superior performance of its financing business. During January-...
The Hindu Business Line  Apr 19  Comment 
Taking a leaf out of models walking down the ramp to display fashion designers’ latest creations, a subsidiary of Shriram Transport Finance Company is doing the same with second-hand commercial ve...




 

Shriram Transport Finance (STF) is the country’s largest asset financing NBFC (non-banking finance company) with 20% to 25% market share in pre-owned truck financing and 7% to 8% market share in new truck financing. The company has niche presence in the high-yielding pre-owned CV financing business with expertise in loan origination and valuation. It had a total employee base of 12,196 at the end of FY09 and had 479 branches across India with 4 m customers (91.3% of the country’s truck owners).


STFC surpassed the sector average asset growth, reporting 19% YoY growth in assets under management for FY09. Pre-owned CVs continue to enjoy dominance in the company’s portfolio allocation (77% in FY09). This was also on the back of demand for working capital loans for the pre-owned CVs. Around 15% of the growth in asset book was derived from the partnership with private financers, wherein STFC primarily took the responsibility of arranging for the funds. The institution maintains a loan to value ratio of 65% and intends to get into the old tractor financing and freight bill discounting businesses. However, the institution’s inability to re-price the new CVs, led to a substantial drop in the net interest margins (NIMs) from 7.4% in FY08 to 6.4% in FY09.


Going forward with better credit rating and increased institutional funding the NIMs are expected to remain in the range of 7.5% to 8%. Over the next four years, the company is targeting to increase its market share to 40% from the present 25% in the pre-owned vehicle segment (asset size of Rs 150 bn from the current Rs 90 bn). To ensure commensurate reach, the company has tied up with 250 private financiers to grow across India on a franchisee basis - to source loans for old trucks and share the profits therein. It has engaged the erstwhile moneylenders for this purpose.


Financial performance: A snapshot
Rs (m) 4QFY07 4QFY08 Change FY07 FY08 Change
Income from operations 4,297 7,121 65.70% 13,843 23,366 68.80%
Interest Expense 2,454 3,934 60.30% 7,383 12,966 75.60%
Net Interest Income 1,843 3,187 72.90% 6,460 10,400 61.00%
Net interest margin (%) 8.50% 7.80%
Other Income 74 524 607.00% 312 1,576 405.50%
Other Expense 692 1,272 83.80% 2,215 3,600 62.50%
Provisions and contingencies 534 667 24.90% 1,665 2,317 39.20%
Profit before tax 692 1,773 156.40% 2,892 6,059 109.50%
Tax 208 654 214.40% 988 2,160 118.60%
Profit after tax/ (loss) 484 1,119 131.40% 1,904 3,899 104.80%
Net profit margin (%) 11.30% 15.70% 13.80% 16.70%
No. of shares (m) 184.1 203.1
P/BV (x)* 3.3
  • Book value as on 31st March 2008


Old over new
(Rs m) FY07 % of total FY08 % of total Change
Disbursements 66,083 115,897 75.40%
New CVs 24,785 37.50% 32,963 28.40% 33.00%
Pre-owned CVs 41,298 62.50% 82,934 71.60% 100.80%
Assets under management 120,385 195,197 62.10%
New CVs 38,080 31.60% 57,062 29.20% 49.80%
Pre-owned CVs 82,305 68.40% 138,135 70.80% 67.80%
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