Shriram Transport is India’s leading vehicle finance company with focus only on second hand commercial vehicle financing. It has a pan India presence but is strong in the South. The track record of the company has been patchy with fair share of NPA problems due to industry related issues despite conservative lending practices. Its fortunes are linked to fleet utilization which drives resale volumes in the Auto industry. Prior to the second wave, this was picking up but has now slowed down. The company has adequate growth capital and the balance sheet can absorb elevated credit costs which may arise due to stress in the system. We have a neutral rating due to very attractive valuations and strong position in the industry but persistently high NPA is a dampener. Merger of other Shriram group NBFCs may diversify operations and de-risk business model – 06-08-2021 Price: 1316.45 Rating: Neutral Weight Recommendation: Hold
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