Shriram Transport Finance Corporation Ltd

shri ram

Shriram Transport Finance Corporation Ltd (STFC), a part of the “SHRIRAM” conglomerate, has significant presence in financial services viz., commercial vehicle financing business, consumer finance, life and general insurance, stock broking, chit funds and distribution of financial products such as life and general insurance products and units of mutual funds.

Incorporated in the year 1979 and registered as a Deposit taking NBFC with Reserve Bank of India, STFC was set up with the objective of offering the common man with a host of products and services that would be helpful to him on his path to prosperity. Over the decades, the company has achieved significant success in reaching this objective, and has created a tremendous sense of loyalty amongst its customers.

STFC decided to finance the much neglected Small Truck Owners. Shriram started lending to the Small Truck Owner to buy new trucks. But found a mismatch between the Aspiration and Ability. The Truck Operator was honest but the Equity at his command was not sufficient to support the credit levels required to buy a new truck. STFC helped them transition from being a driver to being an owner.

STFC is a part of a huge Shriram Group conglomerate that handles the financial services section of the group. The business dominates in financing vehicles especially in the rural areas and there it is beating its competitors. STFC is also engaged in pre-owned commercial vehicle (CV) financing business and offers ancillary services, such as finance for working capital, engine replacement, bill discounting, credit cards and tire-loans as the financial support system. Shriram Automall India Limited is the Company’s subsidiary.

STFC has performed quite well in the past few quarters with Net profit increasing QoQ, with profit of ₹448.68 Cr in the first quarter of the financial year 2017-18, ₹479.11 Cr in the second quarter (Sept 17), ₹495.63 Cr in the third quarter (Dec 17). The final quarter showed a dip in profit to as low as 144.60 Cr though the net sales increased at a substantial rate of 5.22%. The company maintains a healthy dividend payout of 18.53%.

The company is performing better as compared to previous years. Its net profit is increasing QoQ, as is its Net sales. It needs to focus on its ROE which is as low as 12.59% for the last 3 years which shows inefficiency in utilization of funds. The stock is currently priced at ₹1627.55 and is expected to go down to as low as ₹1407.74 with profit expected to decrease slightly but the net sales is expected to increase in the same rate in the coming 2 years.


Swaraj Engines – ICICI recommends ‘buy’

ICICI Wednesday

Swaraj Engines (SEL) is a leading manufacturer of engines supplying to the Swaraj brand of tractors under parent group M&M. It is into manufacturing and supplying of diesel Engines in the range of 22 HP to above 54 HP.

Yesterday, the analysts at ICICI securities came out with a research report on Swaraj Engines. This is an update to a previous report on Swaraj Engines. The report is a relative valuation, as the analysts have used PE ratio to come up with the price target of 2500. At CMP, there is an upward potential of 25% in the next 12-18 months. The company has seen a good run in the past two years. However the growth numbers haven’t been anything more than average. Partial reason could be that SEL has been paying huge dividends out to its shareholders and not invest it back into the business. The company has a very healthy balance sheet with no debt negative working capital and a robust return ratios.

With the back of a strong monsoon, growth in the domestic tractor industry, strong brand recall & capital efficiency of SEL, analysts at ICICI have given an EPS estimate of 84 for FY20. Assuming a PE of 30, the target works to be 2520. The returns however can be expected if the buying price would be below 2000.

For full report click on the link given below.











Capital First – Motilal recommends Buy

Analysts at Motilal Oswal recently met the management of Capital First which aided them to come up with these estimates. The report prepared is a Relative Valuation as it uses multiples and ratios to arrive at the given Valuations. At CMP of 656, there is an upside potential of 46%. The stock so far has underperformed the broader index, but on the back 600+ branch network which will be built over 5 years, improving CASA ratio, customer assets to more than double by FY24, improving PAT due to synergies coming in better than expected, Motilal Oswal expects the stock to deliver a whooping 46% in the next 12 months and recommends a ‘Buy’ rating.


To download the whole report click on the link below.