Shriram Transport Finance Company (BOM:511218)

QUOTE AND NEWS
The Economic Times  Dec 1  Comment 
Buy Shriram Transport Finance Company Ltd. at a price target of Rs 955 and a stop loss at Rs 890 from entry point
The Economic Times  Oct 27  Comment 
Sell Shriram Transport Finance Company Ltd. at a price target of Rs 1050 and a stoploss at Rs 1120 from entry point
The Economic Times  Oct 26  Comment 
Sell Shriram Transport Finance Company Ltd. at a price target of Rs 1080 and a stop loss at Rs 1155 from entry point
The Economic Times  Oct 24  Comment 
Buy Shriram Transport Finance Company Ltd. with a target of Rs 1260 and a stop loss of Rs 1120
The Economic Times  Oct 21  Comment 
Sell Shriram Transport Finance Company Ltd. at a price target of Rs 1070 and a stop loss at Rs 1180 from entry point
The Economic Times  Sep 29  Comment 
Shriram Transport Finance Company Ltd. volume surging in market. Buy for a target of Rs 1270 and a stop loss of Rs 1140
The Economic Times  Sep 23  Comment 
Buy Shriram Transport Finance Company Ltd. at a price target of Rs 1255.0 and a stop loss at Rs 1155.0 from entry point
The Economic Times  Sep 21  Comment 
Buy Shriram Transport Finance Company Ltd. with a target of Rs 1200 and a stop loss of Rs 1130.
The Economic Times  Sep 15  Comment 
Sell Shriram Transport Finance Company Ltd. at a price target of Rs 1240.0 and a stop loss at Rs 1185.0 from entry point
The Economic Times  Aug 17  Comment 
Buy Shriram Transport Finance Company Ltd. at a price target of Rs 1400.0 and a stop loss at Rs 1224.0 from entry point




 

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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