Shriram Transport Finance Shares Rise The Most Since April After Q3 Results

Shares of Shriram Transport Finance Ltd. rose the most since April last year as the vehicle financier’s asset quality improved and disbursements rose in the third quarter.

The company’s disbursements rose 94% sequentially and 9.9% over the year-earlier to Rs 12,530 crore in the quarter ended December, according to an exchange filing.

• Net interest income rose 2% year-on-year to Rs 2,202 crore, compared with the Bloomberg consensus estimate of Rs 2,076.2 crore.
• Net profit fell 17% year-on-year to Rs 727.7 crore, in line with the projected Rs 714.3 crore.

Shriram Transport’s gross non-performing asset ratio stood at 5.33% compared with 8.71% in the preceding three months, while net NPA stood at 3.22% against 6.09%.

Proforma gross NPA, including the accounts that were not classified as bad loans owing to the Supreme Court’s decision in the interest-on-interest case, stood at 7.11% against 7.26% in the July-September period. Its proforma net NPAs were at 4.31% compared with 4.51% in the preceding quarter. The non-bank lender classified the proforma NPAs as gross and net stage 3 assets.

Loan losses and provisions for the quarter stood at Rs 674.7 crore compared with Rs 655.4 crore in the July-September period and Rs 444.4 crore a year ago.

“Our preference for Shriram Transport during current uncertain times is backed by their unique customer base with a moat and certainty in demand for used vehicles,” Emkay’s Jignesh Shial said in a post-earnings note. “Shriram Transport remains one of the top picks from our NBFC coverage. We raise FY22/23 earnings estimates by 26.2% and 23.3%, respectively.”

Shares of Shriram Transport Finance rose as much as 9.2% in early trade on Friday to Rs 1,213.95. Of the 39 analysts tracking the stock, 30 have a ‘buy’ rating, seven suggest a ‘hold’ and two recommend a ‘sell’. The stock crossed its Bloomberg consensus 12-month price target of Rs 1,144.4 in Friday’s session.