Shriram Transport Finance
Reco Price: Rs 759.9,
Target Price: Rs 830
The Shriram Transport Finance stock has run up significantly (+73 per cent relative to Sensex over the last one year) and at current levels (3.1 times P/BV) appears close to fair value. A tighter liquidity environment and higher base effect will lead to modest pressure on NIMs going forward. Management remains optimistic on overall asset quality levels and expects improvements from current levels but potential near-term concerns remain due to a mining ban in Karnataka. Shriram’s loan growth remains steady between 20-25 per cent levels. A buoyant economy, strong CV cycle and rising freight costs will likely keep growth strong at current levels. Shriram is better positioned to pass on rate hikes. Downgrade to Hold (from Buy).
—Citi
