Finance

CLSA has raised target price for this NBFC. Do you own it?

Updated : November 20, 2020 11:51 AM IST

The stock rose as much as 3.3 percent to its day's high of Rs 949.90 per share on the BSE.

CLSA reiterated an 'outperform' rating and raised its target price from Rs 800 to Rs 1,050 per share.

The share price of Shriram Transport rose over 3 percent on Friday after global brokerage house CLSA reiterated an 'outperform' rating and raised its target price from Rs 800 to Rs 1,050 per share.

As per the brokerage, Shriram Transport management continues to see faster-than-expected recovery with 93 percent collection efficiency after Q2. Given this trend, management is optimistic for pre-Covid-level disbursements to be achieved by December, it added.

The stock rose as much as 3.3 percent to its day's high of Rs 949.90 per share on the BSE. The stock price has gained 38 percent in the last 1 month. It has outperformed Nifty by 20 percent in the last three months rising 32 percent in that period.

For FY22-23. CLSA estimates an AUM growth of 10 percent YoY. "This is slightly conservative versus guidance of double-digit YoY growth. We cut estimated FY21-22 credit costs 78-55 bps although we continue to be cautious in an evolving economic environment," added the brokerage.

Management believes a M&LCV cycle uptrend has been delayed by COVID-19 and it expects a double-digit YoY growth in the segment (which accounts for 24 percent of Shriram Transport AUM) for the next few years.

For the September quarter, the firm reported a 10.5 percent decline in net profit at Rs 684.56 crore. The non-banking finance company had posted a net profit of Rs 765.05 crore in the same quarter of 2019-20.

Total income rose 4.68 percent to Rs 4,351.26 crore during the quarter under review from Rs 4,156.92 crore in the same period a year ago, STFC said in a regulatory filing.

However, net interest income fell 1.67 percent to Rs 2,021.86 crore from Rs 2,056.11 crore in the year-ago quarter.

CLSA has raised target price for this NBFC. Do you own it?

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