Hot Chips - Shriram Transport Finance

BSE Code: 511218
Volume: 147858
CMP: Rs 756.15

Shriram Transport Finance Co (STFC) is one of the largest NBFCs in India with a major focus on CV financing. It is the only organised player in the pre-owned CV financing business with a market share of around 25 per cent. Its strength lies in credit evaluation of its customers, valuation of pre-owned CVs, collection of payment from customers, strong customer base, and extensive branch network. STFC with its experience of more than three decades in the field has been able to maintain its gross non-performing assets at around 2 per cent. It has recorded RoAE in the range of 20-30 per cent in the last couple of years on the back of strong loan growth, improvement in securitisation income, and control over operating costs. STFC had a RoAE of around 28.4 per cent in FY10 in comparison to 29.6 per cent in FY09. The stock can be looked at for gain in the short to medium-term perspective.