11 June 2020
4QFY20 Results Update | Sector: Financials
Shriram Transport Finance
Estimate change
TP change
Rating change
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CMP: INR638
TP: INR960 (+50%)
Buy
Moderate biz growth; COVID provisions mar profitability
SHTF’s 4QFY20 PAT declined 70% YoY to INR2.2b (65% miss). While
operating profit missed our estimates by 8% due to lower-than-expected
NII, higher COVID-19 related provisions of INR9.1b led to the PAT miss. PAT
declined 2% YoY in FY20 while RoA/RoE stood at 2.3%/15%.
The company collected money from 84%/23%/52% of its customers in
Mar/Apr/May’20 and in value terms it stood at ~15%/30% of Apr/May’20
collections. NIMs declined 38bp QoQ to 6.76% as the currency movement
on forex borrowings and higher excess liquidity impacted margins. GS3
remained stable YoY and declined 36bp QoQ to 8.36%
We downgrade our EPS estimates by 11% for FY21E on the back of lower
loan book growth. Our channel checks indicate that the used CV and driver-
cum-operator segments (which are SHTF’s target segments) are doing much
better than other segments in CV financing. We believe risk-reward at the
current level is favorable,
Buy with a TP of INR960 at 1x PBV FY22E.
AUM growth remains muted on back of lower disbursements
Disbursements declined ~9%/5% YoY/ QoQ to INR109b, led by 54%/22%
YoY/ QoQ decline in new vehicles and 6%/4% YoY/QoQ decline in used
vehicles at INR103b (95% of total disbursements).
AUM was flat QoQ and grew 5% YoY to INR1.1t. Continuing the trend of the
past 4-5 quarters, new-vehicle AUM declined 6%/16% QoQ/YoY to INR98b.
Used-vehicle AUM grew 1.4%/8% QoQ/YoY to INR940b and forms 86% of
AUM. Working capital loans grew 3% QoQ/YoY to INR60b.
Rural portfolio contributed 41% of AUM (v/s 40% in 3QFY20 and 37% in
4QFY19).
USD500m ECB raise; Margins under pressure; Liquidity sufficient
SHTF raised USD500m of foreign currency borrowings in 4QFY20;
its share
in total borrowings is now up from 6% in FY19 and 13% in 9MFY20 to 18%
in FY20.
NIMs declined 37bp QoQ to 6.8%, the lowest in several quarters.
SHTF had INR104b/INR57b liquidity as of Mar/May’20 on its balance sheet.
The company has applied for moratorium, which has been granted by
some banks. Expect moratorium of INR20b.
GS3 declined while PCR improved; INR90b COVID-19 provisions
GS3 ratio improved 35bp QoQ to 8.36% while PCR improved 250bp to 35%.
GS3 declined 2% QoQ to INR91.8b. The sequential decline was lower than
that witnessed in the earlier quarter due to the lockdown
Write offs of ~INR5b is in line with the trend that we have noticed so far.
The company made
INR9b vs INR90b
COVID-19 provisions (0.9% of AUM,
largely in line with peers). As a result, total ECL provisions increased 50bp
QoQ to 5.8%. Annualized credit costs stood at 4.1% for the quarter.
Management Commentary/Other highlights
In Apr/May’20, 15%/30% of customers (in value terms) paid instalments.
Top management took 10-20% pay cut while other employees have not
received salary hikes.
Management did not discuss capital raise in the board meeting. Tier 1
capital is up 130bp QoQ to 18.1%.
Expect urban market to improve from Sep’20 and rural market from Jun-
Jul’20. Seeing inquiries for used CVs in rural markets.
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
SHTF IN
227
144.7 / 1.9
1367 / 440
-20/-24/-26
2334
Financials & Valuations (INR b)
2020 2021E
Y/E March
83.1
75.7
Net Inc.
62.3
57.3
PPP
25.0
15.1
PAT
110
66
EPS (INR)
-2.4
-39.7
EPS Gr. (%)
794
854
BV/Sh (INR)
Ratios
8.0
7.3
NIM (%)
25.0
24.3
C/I ratio (%)
2.3
1.4
RoA (%)
14.9
8.1
RoE (%)
5.4
12.0
Payout (%)
Valuations
5.8
9.6
P/E (x)
0.8
0.7
P/BV (x)
0.8
1.0
Div. Yield (%)
2022E
82.1
62.0
26.8
118
77.8
960
7.9
24.5
2.4
13.0
12.0
5.4
0.7
1.9
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter
26.3
26.3
26.1
DII
2.7
3.1
3.9
FII
64.7
64.3
50.9
Others
6.4
6.4
19.1
FII Includes depository receipts
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);+91 22 6129 1526 |
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 6129 1539
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |
Divya Maheshwari
(Divya.Maheshwari@motilaloswal.com); +91 22 6129 1540
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Shriram Transport Finance
Valuation and view
Since the IL&FS crisis, the company has diversified into newer borrowing sources like
retail NCDs and ECBs. The share of ECBs in total borrowings has increased
meaningfully from 6% to 18% YoY. SHTF has also increased liquidity to 9-10% of the
balance sheet. However, AUM growth has been weak for the past several quarters.
On the asset quality front, SHTF has done a good job of reducing the GNPL ratio over
the past two quarters. In the current environment, the outlook on credit cost
remains uncertain. We downgrade our EPS estimates by 11% for FY21E on the back
of lower loan book growth. Maintain
Buy with a TP of INR960 at 1x PBV FY22E.
Quarterly performance (INR m)
Y/E March
1Q
Interest Income
37,021
Interest expenses
18,537
Net Interest Income
18,484
Change YoY (%)
20.5
Other Operating Income
271
Other Income
21
Net Income
18,776
Change YoY (%)
21.2
Operating Expenses
4,719
Operating Profit
14,057
Change YoY (%)
15.7
Provisions
5,227
Profit before Tax
8,830
Tax Provisions
3,101
Net Profit
5,729
Change YoY (%)
24.6
Key Operating Parameters (%)
Yield on loans (Cal)
15.9
Cost of funds (Cal)
8.9
Spreads (Cal)
7.1
NIMs (Reported)
7.4
Credit Cost
2.1
Cost to Income Ratio
25.1
Tax Rate
35.1
Balance Sheet Parameters
AUM (INR B)
1,005
Change YoY (%)
21.7
Loans (INR B)
951
Change YoY (%)
23.6
Disbursements (INR B)
134
Change YoY (%)
24.1
Borrowings (INR B)
852
Change YoY (%)
47.0
Loans/Borrowings (%)
111.6
Debt/Equity (x)
6.0
Asset Quality Parameters (%)
GS 3 (INR B)
91.6
Gross Stage 3 (% on
9.1
Assets)
NS 3 (INR B)
60.4
Net Stage 3 (% on Assets)
6.3
PCR (%)
34.0
ECL (%)
5.4
Return Ratios (%)
ROAA (Rep)
2.2
ROAE (Rep)
16.5
FY19
2Q
3Q
39,140 39,484
18,504 19,187
20,636 20,297
25.1
16.3
240
427
98
23
20,974 20,747
25.1
17.7
4,748
4,546
16,226 16,202
22.7
17.3
6,836
6,362
9,390
9,840
3,295
3,485
6,096
6,355
22.6
17.3
16.2
8.5
7.6
7.5
2.7
22.6
35.1
1,044
20.9
987
22.3
138
11.5
882
53.5
111.9
6.1
90.9
8.6
59.8
6.0
34.2
5.4
2.2
17.0
16.2
8.6
7.6
7.4
2.4
21.9
35.4
1,038
14.1
963
13.1
96
-28.5
895
15.8
107.5
5.9
90.3
8.8
58.5
6.0
35.3
5.7
2.2
17.1
4Q
38,197
18,885
19,313
5.0
516
91
19,920
2.9
4,799
15,120
3.2
5,398
9,722
2,262
7,460
-9.2
15.8
8.5
7.3
7.2
2.1
24.1
23.3
1,045
8.5
968
6.6
120
-20.9
879
7.0
110.1
5.6
86.2
8.4
56.6
5.8
34.4
5.4
2.7
19.3
1Q
39,868
20,431
19,436
5.2
671
78
20,185
7.5
4,758
15,428
9.8
5,612
9,816
3,473
6,343
10.7
16.3
9.2
7.2
7.2
2.1
23.6
35.4
1,063
5.8
988
4.0
123
-8.4
906
6.3
109.1
5.6
89.3
8.5
60.9
6.1
31.8
5.3
2.3
15.8
FY20
2Q
3Q
41,099 41,337
21,134 21,193
19,965 20,144
-3.3
-0.8
1,077
1,524
23
22
21,064 21,689
0.4
4.5
5,189
5,382
15,875 16,307
-2.2
0.7
6,607
4,444
9,269 11,863
1,618
3,072
7,651
8,792
25.5
38.4
16.5
9.3
7.1
7.2
2.5
24.6
17.5
1,081
3.6
1,007
2.1
133
-3.7
906
2.7
111.1
5.3
94.0
8.8
63.8
6.3
32.1
5.4
2.7
18.4
16.3
9.3
7.0
7.1
1.6
24.8
25.9
1,089
4.9
1,018
5.7
114
19.2
915
2.2
111.2
5.1
93.9
8.7
63.7
6.2
32.1
5.3
3.1
20.2
FY19
FY20
4Q
40,922 1,53,843 1,62,675
21,589 75,113 82,703
19,333 78,730 79,972
0.1
15.4
1.6
762
1,382
2,949
46
233
203
20,142 80,344 83,124
1.1
12.6
3.5
5,416 18,739 20,788
14,726 61,605 62,336
-2.6
11.5
1.2
11,287 23,823 27,949
3,439 37,783 34,387
1,205 12,143
9,360
2,234 25,640 25,027
-70.1
4.2
-2.4
16.0
9.3
6.8
6.8
4.1
26.9
35.0
1,097
5.0
1,022
5.7
109
-9.1
944
7.3
108.3
5.2
91.8
8.4
59.9
5.8
34.7
5.8
0.8
5.0
4QFY20E
Act v/s
Est. (%)
41,562
-2
21,337
1
20,225
-4
4.7
1,012 -25
40 14
21,277
-5
6.8
5,237
3
16,040
-8
6.1
7,337 54
8,704 -60
2,245 -46
6,458 -65
-13.4
23.3
32.1
1,045
8.5
968
6.6
485
-6.2
879
7.0
110.1
5.6
86.2
8.9
56.5
6.0
34.5
5.4
25.0
27.2
1,097
5.0
1,022
5.7
479
-1.3
944
7.3
108.3
5.2
91.8
9.0
59.9
6.0
34.7
5.8
11 June 2020
2
 Motilal Oswal Financial Services
Shriram Transport Finance
Highlights from management commentary
Business updates
30%/50%/70% of customers are using their vehicles in Apr/May/Jun’20.
However, inter-state movement of trucks is not happening (10% of total AUM).
99% branches are operational.
Expect urban market to improve from Sep’20 and rural market from Jun-Jul’20.
Seeing inquiries for used CVs in rural markets.
LTV of portfolio up to 2018 was at 70%, but now stands at 65%. For new
vehicles, it would be 75-80%.
Taxi segment contributes 3% of the total portfolio. This portfolio is seeing some
challenges. However, 30-40% of the passenger vehicles are now operational.
Shortage of drivers is not a problem that SHTF’s customers would face..
Expect to do some sanctions in the INR3t MSME emergency credit line scheme.
Around 20-30% of borrowers would be eligible.
Did not discuss capital raise in the board meeting.
Asset Quality/Moratorium
Gave moratorium to ~95% customers (except chronic defaulters) but have asked
customers to make some payments if they had the money.
In Apr/May’20,
15%/30% of customers (in value terms) paid instalments.
INR100b incremental
moratorium in the second round of moratorium. If a customer under
moratorium pays back some amount, it will be considered as a prepayment.
Did not avail moratorium for the first three months. Approached banks for
Moratorium 2.0 (amounting to INR20b). 8-9 banks have given consent so far,
while the others are expected to give consent too.
Stage 2 loans: 11.21%.
Liquidity/Funding
Enough liquidity to meet debt obligations till Sep’20.
Borrowed INR8b from banks in Apr-May’20 in addition to the INR2b in TLTRO.
Should get more sanctions in Jun’20. INR40b of debt maturity in Sep’20 and
another INR40b in 3QFY21.
In the current quarter, margins are lower due to some accounting treatment on
exchange rates with respect to foreign currency borrowings.
Raised money from multi-lateral foreign institutions like IFC, Proparco and OAB
in addition to dollar bonds and export credit agencies.
INR23.69b securitization done in 4QFY20.
Re-launched deposit products across branches during the COVID-19 pandemic.
Earlier it was outsourced. Cost of funds: Deposits – rates reduced by 30-40bp
to 7.6%, Banks – 8.5-9% (from 9.25-9.5% earlier; 5-year tenure), Securitization
– slightly lower than bank rate (but volumes have been lower).
Others
SHTF finances used tractors only (ticket size of INR150k).
Up to three years back, NBFCs were not allowed to borrow from overseas. In
addition, the minimum tenure of borrowings was brought down from 5 years to
3 years. If the USD750m overseas borrowing limit for a fiscal is exhausted, then
the RBI could be approached for further borrowings.
3
11 June 2020
 Motilal Oswal Financial Services
Shriram Transport Finance
Government has released only part payment for food grain purchases. Once the
full amount is released, borrowers would have more cash in their hands.
INR110b fixed deposits.
Repossession is only 1% of portfolio.
Key Exhibits
Exhibit 1: AUM growth remains modest…
AUM (INR b)
19
15
10
22
22
21
14
28
14
6
4
5
5
2
8
10
13
18
16
15
11
YoY Growth (%)
Exhibit 2: …driven by decline in new CV AUM
Used CV AUM growth (%)
39
48
46
25
5
8
7
6
8
8
New CV AUM growth (%)
9
-14 -13 -16
-6
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 3: Share of used vehicles in AUM increasing (%)
Used
3
10
3
10
4
11
5
11
5
12
New
5
12
5
12
6
11
Others
6
11
5
10
5
10
5
9
Exhibit 4: Product mix remains largely stable (%)
HCV
44
25
20
44
24
21
M&LCV
2
5
2
2
3
4
4
4
24 23 23
PV
5
4
23
21
Tractors
BL
Others
3
3
2
22
23
3
3
2
23
23
2
3
3
4
3
3
3
3
3
3
3
4
23 23 23 23
22
21
21
21
22
23
23
87
87
85
84
83
82
83
83
84
84
85
86
47
47
47
47
47
46
46
46
46
46
46
46
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 5: Share of rural AUM up 400bp YoY (%)
Urban
34
29
30
32
34
35
36
Rural
37
38
39
40
41
Exhibit 6: Share of ECBs up ~500bp/1,700bp QoQ/YoY (%)
NCD
18
0
10
22
Term loans
16
3
10
19
19
32
21
3
11
20
18
27
Sec.
13
0
12
20
21
35
Deposits
ECB
Others
8
9
10
10
10
13
12
18
12
13
13
13
22
25
24
23
16
16
16
16
30
25
24
23
66
71
70
68
66
65
64
63
62
61
60
21
59
29
Source: MOFSL, Company
Source: MOFSL, Company
11 June 2020
4
 Motilal Oswal Financial Services
Shriram Transport Finance
Exhibit 7: Disbursements down 9% YoY…
Disbursements (INR b)
65
44
26
1
24
12
-28
-8
-4
19
-9
Disbursment Gr. (% YoY)
Exhibit 8: ...as new CV disbursements drag 22%/55%
QoQ/YoY
Used (INR b)
111 109
120
110 115
90
New (INR b)
110 113
123
108 103
99
-21
10
13
24
32
25
23
4
8
9
8
5
4
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 9: Margins down on a QoQ/YoY basis
Reported NIM (%)
7.5 7.5 7.6 7.6 7.4 7.5 7.4
7.2 7.2 7.2 7.1
6.8
Exhibit 10: GS3/ PCR improve ~36bp/260bp QoQ
GS 3 (INR b)
GS 3 ratio (%)
9.1
8.6
8.8
8.5
6.1
NS 3 (INR b)
NS 3 ratio (%)
8.8
6.3
8.7
6.2
8.4
5.8
8.4
5.8
6.3
6.0
6.0
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 11: Net slippage ratio declines meaningfully
Net slippage ratio (%)
3.8
3.5
1.7
2.3
2.0 2.0
1.6
Write-off % of TTM AUM
3.6
2.1
1.8 2.02.0
1.9
1.1
Exhibit 12: COVID-19 provisioning impacts profitability (%)
RoA (%)
16.5
17.0
17.1
RoE (%)
15.8
18.4
20.2
19.3
3.4 3.3
5.0
Source: MOFSL, Company
Source: MOFSL, Company, Reported
11 June 2020
5
 Motilal Oswal Financial Services
Shriram Transport Finance
Valuation and view
Since the IL&FS crisis, the company has diversified into newer borrowing sources
like retail NCDs and ECBs. The share of ECBs in total borrowings has increased
meaningfully from 6% to 18% YoY. SHTF has also increased liquidity to 9-10% of
the balance sheet.
AUM growth has been weak for the past several quarters. Expect the trend to
continue in the ensuing quarters due to the macro-economic outlook.
Our channel checks indicate that SHTF’s target segments – the used CV and
driver cum operator segments – are doing much better than the other segments
in CV financing.
On the asset quality front, SHTF has done a good job of reducing the GNPL ratio
over the past two quarters. In the current environment, the outlook on credit
cost remains uncertain.
We downgrade our EPS estimates by 11% for FY21E on the back of lower loan
book growth. Maintain
Buy with a TP of INR960 at 1x PBV FY22E.
Exhibit 13: We downgrade our EPS estimates for FY21 by ~11% to factor in lower AUM performance
INR b
NII (incl. Sec. Inc.)
Other Income
Total Income
Operating Expenses
Operating Profits
Provisions
PBT
Tax
PAT
AUM
Loans
Borrowings
NIM (%)
Credit Cost (%)
RoA
FY21
76.4
5.1
81.5
18.2
63.3
40.3
23.0
6.0
17.0
1,073
987
851
7.6
4.0
1.6
Old Est
FY22
80.1
5.9
86.0
20.2
65.8
29.9
36.0
9.3
26.6
1,129
1,038
880
7.9
2.9
2.4
FY21
72.5
3.2
75.7
18.4
57.3
36.9
20.4
5.3
15.1
1,045
972
868
7.3
3.7
1.4
New Est.
FY22
78.3
3.8
82.1
20.1
62.0
25.8
36.2
9.4
26.8
1,094
1,017
892
7.9
2.6
2.4
FY21
-5.0
-7.1
0.9
-9.4
-8.3
-11.4
-11.4
-11.4
-2.6
-1.6
2.0
Change (%)
FY22
-2.2
-4.5
-0.2
-5.8
-13.7
0.8
0.8
0.8
-3.1
-2.0
1.4
Source: MOFSL, Company
Exhibit 14: One-year forward P/B
P/B (x)
Min (x)
3.9
2.6
1.9
1.3
0.0
1.4
0.6
0.7
Avg (x)
+1SD
Max (x)
-1SD
3.6
2.4
Exhibit 15: One-year forward P/E
31.0
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
23.3
21.0
12.6
11.0
16.0
9.2
7.0
7.2
1.0
Source: MOFSL, Company
Source: MOFSL, Company
11 June 2020
6
 Motilal Oswal Financial Services
Shriram Transport Finance
Valuation Matrix
Rating
66
FY22E
CMP
(INR)
Mcap
(USDb)
41.1
1.8
0.4
0.1
1.9
1.3
1.7
18.6
0.6
1.7
5.1
0.5
P/E (x)
FY21E
17.0
6.0
4.1
2.2
10.1
19.7
15.9
34.9
5.1
7.2
12.0
22.1
FY22E
12.9
5.0
3.2
2.1
5.8
10.9
11.7
22.8
4.5
5.3
10.7
18.4
P/BV (x)
FY21E
1.8
0.7
0.4
0.3
0.8
0.8
1.4
3.9
0.6
0.8
2.8
3.3
FY22E
1.4
0.6
0.3
0.3
0.7
0.8
1.3
3.4
0.5
0.7
2.4
2.9
RoA (%)
FY21E
1.6
1.0
1.1
2.3
1.3
0.7
1.2
2.4
3.0
1.6
7.1
3.7
FY22E
1.5
1.1
1.4
2.4
2.3
1.2
1.6
3.4
3.4
2.1
7.2
4.0
RoE (%)
FY21E
11.2
12.0
9.6
14.4
7.7
4.2
9.4
11.8
11.4
11.3
25.8
16.0
FY22E
11.0
13.0
11.5
13.6
12.2
7.2
11.6
15.9
11.8
13.8
24.4
16.9
HFCs
HDFC*
Buy
1,787
LICHF
Buy
272
PNBHF
Neutral
211
REPCO
Buy
101
Vehicle fin.
SHTF
Buy
638
MMFS
Buy
157
CIFC
Buy
151
Diversified
BAF
Neutral
2,337
SCUF
Buy
684
LTFH
Buy
62
MUTH
Neutral
961
MAS
Buy
681
*Note: Adjusted investments in subsidiaries
11 June 2020
7
 Motilal Oswal Financial Services
Shriram Transport Finance
Financials and Valuations
Income Statement
Y/E March
Interest Income
Interest Expenses
Net Interest Income
Change (%)
Other Operating Income
Other Income
Net Income
Change (%)
Operating Expenses
Operating Profit
Change (%)
Provisions
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Proposed Dividend
2015
77,779
44,029
33,750
42.5
7,379
707
41,836
9.7
10,783
31,054
8.7
12,630
18,424
6,046
32.8
12,378
-2.1
2,151
2016
95,300
50,744
44,556
32.0
6,171
762
51,489
23.1
13,089
38,400
23.7
20,586
17,814
6,032
33.9
11,782
-4.8
2,731
2017
98,013
52,094
45,919
3.1
9,293
758
55,970
8.7
12,288
43,682
13.8
24,443
19,239
6,666
34.6
12,573
6.7
2,995
2018
1,31,935
63,688
68,248
48.6
1,051
2,027
71,326
27.4
16,085
55,241
26.5
17,223
38,018
13,413
35.3
24,605
95.7
3,006
2019
1,53,843
75,113
78,730
15.4
1,382
233
80,344
12.6
18,739
61,605
11.5
23,823
37,783
12,143
32.1
25,640
4.2
3,282
2020
1,62,675
82,703
79,972
1.6
2,949
203
83,124
3.5
20,788
62,336
1.2
27,949
34,387
9,360
27.2
25,027
-2.4
1,326
2021E
1,58,552
86,039
72,513
-9.3
2,949
203
75,664
-9.0
18,365
57,299
-8.1
36,920
20,380
5,299
26.0
15,081
-39.7
1,508
(INR M)
2022E
1,59,740
81,390
78,350
8.0
3,539
233
82,121
8.5
20,122
61,999
8.2
25,756
36,244
9,423
26.0
26,820
77.8
2,682
Balance Sheet
Y/E March
Capital
Reserves & Surplus (Ex OCI)
Net Worth
Other Comprehensive Income
Net Worth
Change (%)
Borrowings
Change (%)
Other Liabilities
Total Liabilities
Investments
Change (%)
Loans
Change (%)
Other Assets
Total Assets
E: MOFSL Estimates
2015
2,269
90,111
92,380
92,380
11.7
4,42,762
23.2
58,130
5,93,272
33,272
22.1
5,07,638
30.5
52,362
5,93,272
2016
2,269
99,272
1,01,541
1,01,541
9.9
4,97,907
12.5
80,185
6,79,633
13,562
-59.2
6,37,701
25.6
28,371
6,79,633
2017
2,269
1,10,247
1,12,516
-13
1,12,503
10.8
6,87,982
38.2
16,627
8,17,112
22,587
66.5
7,40,157
16.1
54,369
8,17,112
2018
2,269
1,31,871
1,34,140
-26
1,34,114
19.2
8,21,308
19.4
17,028
9,72,450
23,415
3.7
9,07,456
22.6
41,579
9,72,450
2019
2,269
1,54,228
1,56,497
-49
1,56,448
16.7
8,79,144
7.0
17,333
10,52,925
39,991
70.8
9,67,515
6.6
45,419
10,52,925
2020
2,269
1,77,832
1,80,101
-49
1,80,052
15.1
9,43,718
7.3
17,517
11,41,286
27,985
-30.0
10,22,316
5.7
90,985
11,41,286
2021E
2,269
1,91,405
1,93,674
-49
1,93,624
7.5
8,67,640
-8.1
21,021
10,82,285
30,783
10.0
9,71,757
-4.9
79,745
10,82,285
(INR M)
2022E
2,269
2,15,543
2,17,812
-49
2,17,763
12.5
8,92,145
2.8
25,225
11,35,132
33,862
10.0
10,17,045
4.7
84,225
11,35,132
11 June 2020
8
 Motilal Oswal Financial Services
Shriram Transport Finance
Financials and Valuations
Ratios
Y/E March
Spreads Analysis (%)
Yield on loans
Cost of funds
Spread on loans
NIMs
Profitability Ratios (%)
Cost/Income
Emp/Operating Exp
RoE
RoA
ROA (On AUM)
Asset Quality (%)
GNPA
NNPA
GNPA %
NNPA %
PCR %
Capitalisation (%)
CAR
Tier I
Tier II
Average Leverage on Assets (x)
2015
16.2
11.0
5.2
7.5
2016
16.1
10.8
5.3
7.8
2017
13.9
8.8
5.1
6.7
2018
15.7
8.4
7.2
8.3
2019
16.0
8.8
7.2
8.4
2020
16.0
9.1
6.9
8.0
2021E
15.5
9.5
6.0
7.3
(%)
2022E
15.6
9.3
6.4
7.9
25.8
39.8
14.1
2.3
2.2
25.4
45.0
12.2
1.9
1.8
22.0
44.6
11.7
1.7
1.7
22.6
44.3
20.0
2.7
2.8
23.3
47.1
17.6
2.5
2.6
25.0
48.6
14.9
2.3
2.3
24.3
49.5
8.1
1.4
1.4
24.5
49.7
13.0
2.4
2.5
18,941
3,791
3.7
0.8
80.0
38,702
11,437
6.1
1.9
70.4
88,597
56,419
12.0
8.0
36.3
89,345
58,401
9.8
6.7
34.6
86,163
56,465
8.9
6.0
34.5
91,797
59,911
9.0
6.0
34.7
1,36,856
88,957
14.1
9.6
35.0
1,22,218
79,442
12.0
8.2
35.0
23.4
17.7
5.7
6.2
2015
407
11.7
395
137
8.7
55
-2.1
8.0
20.6
16.4
4.1
6.6
2016
448
9.9
412
169
23.7
52
-4.8
10.0
16.6
14.3
2.4
7.0
2017
496
10.8
322
193
13.8
55
6.7
10.0
17.4
14.5
2.9
7.3
2018
591
19.2
411
243
26.5
108
95.7
11.0
20.3
15.6
4.7
7.0
2019
690
16.7
0.9
516
1.2
272
11.5
2.3
113
4.2
5.6
12.0
1.9
20.4
16.5
3.9
6.5
2020
794
15.1
0.8
609
1.0
275
1.2
2.3
110
-2.4
5.8
5.0
0.8
22.4
18.7
3.7
5.9
2021E
854
7.5
0.7
579
1.1
253
-8.1
2.5
66
-39.7
9.6
6.6
1.0
23.2
20.1
3.1
5.4
2022E
960
12.5
0.7
715
0.9
273
8.2
2.3
118
77.8
5.4
11.8
1.9
Valuations
Book Value (INR)
BV Growth (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
OPS (INR)
Growth (%)
Price-Earnings (x)
EPS (INR)
Growth (%)
Price-Earnings (x)
Dividend
Dividend Yield (%)
E: MOFSL Estimates
11 June 2020
9
 Motilal Oswal Financial Services
Shriram Transport Finance
NOTES
11 June 2020
10
 Motilal Oswal Financial Services
Shriram Transport Finance
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
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https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
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Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL
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inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
11 June 2020
11
 Motilal Oswal Financial Services
Shriram Transport Finance
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on
the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL
even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
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nature. The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for
informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing
in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this
document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this
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expressed may not be suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade
securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of
the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
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entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
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misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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