Quarterly results | NBFC
August 07, 2019
Shriram Transport Fin Co
BUY
CMP
1,000
Performance Highlights
Target Price
1,385
Particulars (` cr)
Q1FY20
Q4FY19
% chg (qoq)
Q1FY19
% chg (yoy)
Investment Period
12 Months
NII
1,962
1,906
2.9
1,823
7.6
Pre.Prov. Profit
1,543
1,512
2.0
1,406
9.7
Stock Info
PAT
634
746
(15)
573
10.7
Sector
NBFC
Source: Company, Angel Research
Market Cap (` cr)
22,286
For Q1FY2020, STFC has reported in-line numbers. For the quarter, PAT
Beta
1.4
increased 11% yoy, AUM growth continued to moderate at 6% yoy vs. 9% in
52 Week High / Low
1,450/903
Q4FY2019 and 22% in Q1FY2019. Key positive were stable asset quality with
Avg. Daily Volume
86,106
stage 3 at 8.5% and coverage +30% and credit cost for the quarter was 2.1%.
Face Value (`)
10
Management maintained credit cost guidance of 2% for FY2020.
BSE Sensex
36,690
AUM growth moderated; stable NIM: during the quarter, STFC reported AUM
Nifty
10,855
growth of 6% yoy, led by working capital (53% yoy on low base) and used vehicle
Reuters Code
SRTR.BO
loan (6% yoy). Used vehicle AUM led by M&CV segment grew at healthy rate of
Bloomberg Code
SHTF IN
15% yoy. Management guided for AUM growth of 15% yoy if growth improves in
2HFY2020 and increasing presence in rural area coupled with festive season,
which will support growth. NIM remained stable at 8.44% yoy (up 22bps qoq), as
Shareholding Pattern (%)
the company managed to pass incremental higher cost to borrowers.
Promoters
26.1
Asset quality steady; credit cost guidance maintained at 2%: Gross stage 3
MF / Banks / Indian Fls
8.1
increased marginally by 4%/declined 3% qoq /yoy. Provision for stage 3 declined
FII / NRIs / OCBs
56.4
by 259/222 bps qoq/yoy as it reversed additional provision made during Kerala
Indian Public / Others
9.4
flood. Management continued to guide credit cost for FY2020 at 2%.
Outlook & Valuation: We expect STFC’s AUM to grow at CAGR of 13% over
Abs.(%)
3m 1yr 3yr
FY2019-21E primarily owing to (1) post-election government to increase spending
Sensex
(1.1)
(2.6)
30.2
on infra project (macro recovery), and (2) pre-buying of CV before the BS VI will
SHTF
1.3
(29.5)
(22.4)
also improve the pricing of older vehicles. We expect STFC to report RoA/RoE to
2.7%/17.1% in FY2021E respectively. At CMP, the stock is trading at 1.2x
FY2021E ABV and 7x FY2021E EPS, which we believe is reasonable for
differentiated business model with return ratios. We recommend a BUY on the
stock with a Target Price of `1,385.
3 Year Price Chart
1800
Key Financials
1600
1400
Y/E March (` cr)
FY17
FY18
FY19
FY20E
FY21E
1200
NII
5,561
6,800
7,808
8,681
9,946
1000
YoY Growth (%)
10.1
22.3
14.8
11.2
14.6
800
PAT
1,257
2,460
2,562
2,868
3,405
YoY Growth (%)
6.7
95.7
4.2
11.9
18.7
EPS
55
108
113
126
150
Source: Company
Adj Book Value
425
504
607
697
815
P/E
18
9
9
8
7
P/Adj.BV
2.4
2.0
1.6
1.4
1.2
Jaikishan J Parmar
ROE (%)
11.7
19.8
17.4
16.7
17.1
Research Analyst
ROA (%)
1.8
2.9
2.5
2.6
2.7
022 39357600, Extn: 6810
Source: Company, Valuation done on closing price of 7/8/2019
Please refer to important disclosures at the end of this report
1
Quarterly results | Q1FY2020 Result Update
Research Team Tel: 022 - 39357800
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Disclosure of Interest Statement
Shriram Transport Fin
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
Over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)