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Reliance Securities
Shriram
Transport (Buy)
CMP: ₹998.90
Target: ₹1,159
Shriram Transport Finance Company (STFC) was set up with the objective of offering the common man a host of products and services that would be helpful to him on his path to prosperity. Over the decades, the company has achieved significant success in reaching this objective, and has created a tremendous sense of loyalty amongst its customers.
We expect SFTC’s operating environment would improve post completion of remonetisation process and implementation of BS-IV emission norms for vehicles and rollout of Goods & Services Tax.
Disbursements improved by 29.5 per cent q-o-q to ₹10,520 crore in 4QFY17 as against ₹8,120 crore in 3QFY17 primarily due to revival of the demand post demonetisation.
Further, government’s effort to revive growth in infrastructure sector and rural economy in Budget 2017-18 augurs well for STFC.
As overhang of demonetisation is behind, we expect gradual improvement in performance over the next few quarters and reiterate our ‘buy’ recommendation on the stock.
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