Reviews

In this edition, we have reviewed Shriram Transport Finance Company and Trent Ltd. We suggest our readerinvestors to HOLD in Shriram Transport Finance Company and Trent Ltd.

We had recommended Shriram Transport Finance Company Ltd (STFCL) in volume 33, issue no. 17, dated July 23-Aug 5, 2018, under the ‘Analysis’ segment. The stock was trading at Rs. 1,235.85 then and was recommended owing to robust growth in AUMs and stabilising asset quality. 

STFCL is one of the largest asset financing NBFCs in India with a niche presence in financing pre-owned trucks and small truck owners (STOs).The services offered by the company 


includes commercial vehicle finance, passenger commercial vehicle finance, multi-utility vehicle finance, three-wheeler finance, tractor finance and construction equipment dinance. 

On the financial front, the net sales in Q4FY19 climbed 9.20 per cent to Rs. 3871.33 from Rs. 3,545 reported in the same quarter of the previous month. The PBIDT came in at Rs. 2,863.12, showing a fall of 4.16 per cent in Q4FY19 as compared to Rs. 2,987.36 crore posted in Q4FY18. The PAT in Q4FY19 was posted at Rs. 746.04 crore, down by 22 per cent from Rs. 961.76 crore registered in Q4FY18. 

On the annual front, net sales came in at Rs. 15,522.44 crore in FY19, up by 16.72 per cent from Rs. 13,298.67 crore in FY18. The PBIDT was at Rs. 11,309.24, showing a growth of 13 per cent from Rs. 10,003.97 crore in FY18. The PAT in FY19 was at Rs. 2,563.99 crore, up by 4 per cent from Rs. 2,460.54 crore in FY18. 

Since our recommendation, the stock has fallen by 12.12 per cent. However we believe that the company would gain some momentum in the near future. Until then, we recommend a HOLD.


We had recommended Trent in volume 33, issue no. 19, dated Aug 20 - Sept 02, 2018, under the ‘Choice Scrip’ segment. The stock was then trading at Rs. 363 and was recommended owing to the growth potential, strategic acquisitions and increasing disposable incomes. 

Trent Ltd is a part of the Tata Group and is engaged in the business of retailing. The business areas of the company include the following: Westside: With a number of stores across India, this chain offers clothes etc., Star Bazaar: This hypermarket chain offers a wide choice of products, including staple foods, beverages, health and beauty products, etc., Landmark: A leader in the books and music category, this chain has a range of titles in books and music, and also stocks movies, etc., Fashion Yatra: The stores bring quality fashion at low prices to value conscious customers in towns across India. 

On the financial front, the company in Q4FY19 has registered a 26 per cent growth in terms of net sales at Rs. 668.67 crore as against Rs. 528 crore in the same quarter of the previous year. The PBIDT has also jumped 35 per cent in Q4FY19 to Rs. 33.76 crore as compared to Rs. 24.90 crore in Q4FY18. The PAT rose by 36 per cent on a YoY basis in Q4FY19. PAT was reported at Rs. 15.95 crore, while in Q4FY18 it was 11.66 crore. 

On the annual front, the company registered a growth of 22.52 per cent in terms of the topline at Rs. 2,531.68 crore in FY19 as against Rs. 1,066.29 crore in FY18. The PBIDT in FY19 was at Rs. 236.53 crore, up by 17.47 per cent from Rs. 201.36 crore reported in FY18. The net profit in FY19 stood at Rs. 127.49 crore, increasing by 9.23 per cent as compared to Rs. 116.72 crore reported in FY18. 

Since our recommendation, the stock has fallen by 2.30 per cent. The financials of the company look healthy and we thus recommend a HOLD.

(Closing price as of May 21, 2019)

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