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Shriram Transport Finance Co. Ltd.
F1Q12: A Mixed Quarter; Outlook Uncertain
What's Changed
Price Target Rs820 to Rs720
% Chg EPS F12e/F13e/F14e -13%/-12%/-11%
We maintain EW – revenue growth will be under
pressure in F12 (rising rates, slowing macro).
Ongoing regulatory uncertainty about bank funding
will also overhang stock performance. However,
valuations seem fair at 11.7x F12e P/E and 2.6x BV.
Our PT falls 12% to Rs720 to reflect lower
growth/margins.
Reported profits of Rs3.47 bn (+2% QoQ, +20% YoY)
were 6% ahead of our estimate: The key highlights:
• Loan disbursement growth slowed to 20% YoY from
59% YoY delivered in QE-Mar-11. AUM growth
slowed to 22% from 24%
• Margins were at 7.91% (+6 bps YoY / +26 bps QoQ)
• GNPLs increased 14% QoQ. LLP/average AUMs
moved up to 1.9% (a 17 quarter high) from 1.4% in
QE Mar-11.
Revenue growth to slow in F2012: We expect volume
growth to moderate to 16% in F12 from 24% YoY in F11
owing to the impact of rising rates and macro slowdown.
Further, margins will also see some compression as the
impact of rising funding costs filters through.
Changes in regulations with regard to securitization
of loans to banks remains a potential risk… from the
perspective of both funding costs and capital
consumption (See “Priority Sector for Securitized Loans:
Status Quo Continues; But Outlook Still Uncertain”
dated July 4, 2011 for details). Our estimates assume
that the proportion of securitized loans continues at the
current level of 40% and hence any reduction could
have implications for earnings progression.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Shriram Transport Finance Co. Ltd.
F1Q12: A Mixed Quarter; Outlook Uncertain
What's Changed
Price Target Rs820 to Rs720
% Chg EPS F12e/F13e/F14e -13%/-12%/-11%
We maintain EW – revenue growth will be under
pressure in F12 (rising rates, slowing macro).
Ongoing regulatory uncertainty about bank funding
will also overhang stock performance. However,
valuations seem fair at 11.7x F12e P/E and 2.6x BV.
Our PT falls 12% to Rs720 to reflect lower
growth/margins.
Reported profits of Rs3.47 bn (+2% QoQ, +20% YoY)
were 6% ahead of our estimate: The key highlights:
• Loan disbursement growth slowed to 20% YoY from
59% YoY delivered in QE-Mar-11. AUM growth
slowed to 22% from 24%
• Margins were at 7.91% (+6 bps YoY / +26 bps QoQ)
• GNPLs increased 14% QoQ. LLP/average AUMs
moved up to 1.9% (a 17 quarter high) from 1.4% in
QE Mar-11.
Revenue growth to slow in F2012: We expect volume
growth to moderate to 16% in F12 from 24% YoY in F11
owing to the impact of rising rates and macro slowdown.
Further, margins will also see some compression as the
impact of rising funding costs filters through.
Changes in regulations with regard to securitization
of loans to banks remains a potential risk… from the
perspective of both funding costs and capital
consumption (See “Priority Sector for Securitized Loans:
Status Quo Continues; But Outlook Still Uncertain”
dated July 4, 2011 for details). Our estimates assume
that the proportion of securitized loans continues at the
current level of 40% and hence any reduction could
have implications for earnings progression.
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