MOSL: SHRIRAM TRANSPORT FINANCE (Buy)-Liquidity crunch weighs on growth across segments
SHRIRAM TRANSPORT FINANCE: Liquidity crunch weighs on growth across segments
(SHTF IN, Mkt Cap USD3.3b, CMP INR1028, TP INR1400, 36% Upside, Buy)
Shriram Transport Finance (SHTF) reported 3QFY19 PAT at INR6.4b, in line with of our estimate of INR6.2b (17% YoY growth). However, largely flattish AUM QoQ surprised negatively. Liquidity crunch in the system impacted disbursements (down 32% QoQ and 30% YoY). Company increased securitization book during the quarter to INR193b v/s INR166b a quarter ago.
AUM grew 15% YoY and was flat QoQ at INR1.04t. Within AUM, share of new commercial vehicles (CVs) declined 5% QoQ, while used CVs and others were largely flat QoQ.
The used commercial vehicle (CV) loan book grew 11% YoY, while the new CV segment and other segments registered robust growth of 25% and 57% YoY, respectively. The share of others increased to 5.4% of the AUM v/s 3.9% a year ago, with the segment contributing ~16% to the incremental growth YoY.
Reported margins were down 5-10bp, both QoQ and YoY to 7.44%. C/I ratio came in flat at 21% on a YoY basis.
Gross Stage 3 loans declined 4% YoY to INR90b. However, Gross Stage 3 as % of AUM increased to 8.8% v/s 8.6% in 2QFY19, even as AUM declined. Credit costs came in at INR6.4b (v/s estimate of INR6.9b). We attribute this to lower standard asset provisioning due to no loan growth in the quarter.
Shriram Transport Finance is a public company domiciled in India. Co. provides finance for commercial vehicles, construction equipments and other loans. Co. also provides financial services viz., commercial vehicle financing business, consumer finance, life and general insurance, stock broking, chit funds and distribution of financial products such as life and general insurance products and units of mutual funds. Apart from these financial services, Co. is also in non-financial services business such as property development, engineering projects and information technology.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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