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Motilal Oswal Report
Shriram Transport Finance Company Ltd.’s Q1 FY21 profit after tax halved to Rs 3.2 billion (6% miss).
While growth was muted, collection efficiency improved month on month basis. Shriram Transport also cut opex by 30% QoQ.
Collection efficiency, in terms of the number of customers/, improved drastically to 73%/53% in July 2020 from 52%/30% in May 2020.
Despite this, the company took additional Rs 9.6 billion Covid-19 provisions, taking the total Covid-19 provision buffer to Rs 18.7 billion (i.e., 1.8% of loans).
We modestly increase FY21 estimates to factor higher asset under management and lower opex. Our credit cost estimate of 3.5% for FY21 remains unchanged.
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