2QFY2019 Result Update | NBFC
Oct 30, 2018
Shriram Transport Fin Co
BUY
CMP
`1,301
Performance Highlights
Target Price
`1,760
Investment Period
12 Months
Particulars (` cr)
2QFY19
1QFY19
% chg (qoq) 2QFY18
% chg (yoy)
NII
2,055
1,881
9.3
1,649
24.6
Sector
NBFC
Pre.Prov. Profit
1,622
1,416
14.5
1,322
22.7
Market Cap (` cr)
25,473
PAT
609
573
6.3
496
22.7
Beta
1.2
Source: Company
52 Week High / Low
1670/898
SHTF reported 2QFY19 PAT of `609cr (up 23% yoy/6% qoq), helped by strong
AUM growth and marginal improvement in NIM. NII increased 25% yoy with
Avg. Daily Volume
1,27,000
reported NIM increased 6bps (8bps qoq) to 7.52%. Operating profit growth was
Face Value (`)
10
healthy at 23% YoY to `1,622cr. Asset quality improved QoQ with Gross Stage 3
BSE Sensex
33,891
ratio falling 40bps QoQ to 8.71% (on AUM) while coverage ratio remained
Nifty
10,198
stable at 34%.
Reuters Code
SRTS.NS
Healthy AUM growth; Stable NIM
Bloomberg Code
SHTF.IN
During the quarter SHTF reported commendable growth of 21%yoy, led by
business loan (105% yoy on low base) and new vehicle (46% yoy). The reported
NIM increased 6bps yoy (8bps qoq), rise in yields (rate hike in June-18) and lower
Shareholding Pattern (%)
CoF on account of change in the borrowing mix. The Cost-income ratio increased
Promoters
26.1
91bps YoY to 22% as the company continued investment into manpower and
MF / Banks / Indian Fls
4.0
branches during the year. Credit cost sequentially increased 50bps to 2.6%, but
FII / NRIs / OCBs
51.2
the management is confident of reducing it to 2.0% over the coming 1-1.5 years.
Indian Public / Others
6.9
On asset quality front, Absolute Gross stage 3 assets declined 1% qoq and similar
qoq decline in Net stage 3 also. The Gross stage 3 ratio declined 40bps qoq to
8.7% (on AUM) while the net stage 3 ratio declined 28bps QoQ to 5.7%.
Abs.(%)
3m 1yr 3yr
Coverage ratio remained stable at 34%.
Sensex
(9.6)
1.9
27.1
SHTF
(20.6)
(4.8)
19.1
On liquidity front, SHTF has `1000cr of liquidity on its balance sheet, in addition
to `2000cr of committed bank lines (equal to one month’s liability payments).
Outlook & Valuation: We expect SHTF’s AUM to grow at CAGR of 20% over
FY18-20E led by stronger CV volume, macro recovery and improving rural
market. The company’s return ration are at decade low levels (RoA/RoE -
3-year price chart
1.9%/13% in FY18) primarily owing to higher credit cost, which we believe to
1,700
normalize FY19E onwards, which would propel RoA/RoE to 2.8%/20.7% in
1,500
1,300
FY20E. At CMP, the stock is trading at 2.1x FY20E ABV and 10x FY20E EPS. We
1,100
recommend a BUY on the stock with a target price of `1,760/-.
900
700
Exhibit 1: Key Financials
Y/E March (` cr)
FY16
FY17
FY18
FY19E
FY20E
NII
5,052
5,561
6,771
8,042
9,702
YoY Growth (%)
32.0
10.1
21.8
18.8
20.6
Source: Company, Angel Research
PAT
1,178
1,257
1,569
2,315
3,284
YoY Growth (%)
(4.8)
6.7
24.8
47.5
41.9
EPS
52
55
69
102
145
Adj Book Value
397
425
460
561
675
Jaikishan J Parmar
P/E
22
20
16
11
8
022 39357600, Extn: 6810
P/Adj.BV
2.8
2.6
2.4
2.0
1.7
ROE (%)
12.2
11.7
13.1
16.6
19.7
ROA (%)
1.9
1.8
1.9
2.4
2.8
Source: Company
Please refer to important disclosures at the end of this report
1
Shriram Transport Fin Co | 2QFY2019 Result Update
Exhibit 1: Quarterly Result Update
Particulars (` cr)
2QFY17
3QFY17
4QFY17
1QFY18
2QFY18
3QFY18
4QFY18
1QFY19
2QFY19
% QoQ % YoY
Total Interest Income
2,689
2,695
2,683
3,116
3,233
3,063
3,271
3,732
3,917
5
21
Interest Expenses
1,336
1,282
1,275
1,283
1,584
1,354
1,463
1,851
1,862
1
18
Net Interest Income (NII)
1,353
1,412
1,409
1,832
1,649
1,709
1,808
1,881
2,055
9
25
% Growth YoY
4
(2)
5
35
17
21
(1)
14
20
44
21
Other Income
17
18
24
22
27
22
172
7
24
229
(10)
Total Income
2,706
2,713
2,707
3,138
3,260
3,085
3,443
3,740
3,942
5
21
Net Income
1,370
1,430
1,433
1,854
1,676
1,731
1,979
1,888
2,080
10
24
Operating Expenses
314
291
290
338
354
383
419
472
458
(3)
29
Employee Expenses
139
131
127
173
164
181
206
225
232
3
42
Other Operating Expenses
175
160
164
165
190
202
213
247
226
(9)
19
Operating Profit
1,056
1,139
1,142
1,516
1,322
1,349
1,560
1,416
1,622
15
23
Provisions
462
611
911
582
567
585
1,367
533
684
28
21
PBT
594
529
231
934
755
763
193
883
938
6
24
Provisions for Tax
206
183
81
238
259
268
49
310
329
6
27
Tax Rate %
35
35
35
26
34
35
25
35
35
(0)
2
PAT
388
346
150
696
496
496
145
573
609
6
23
Asset Quality
GNPA
4,242
4,306
5,408
5,549
5,773
6,046
7,376
7,459
7,749
4
34
NNPA
1,252
1,058
1,659
1,620
1,655
1,751
2,131
2,132
2,278
7
38
Gross NPAs (%)
7
7
8
8
8
8
9
9
9
(21)
71
Net NPAs (%)
2
2
3
2
2
2
3
3
3
1
30
PCR (Calculated, %)
69
74
68
69
70
69
69
69
69
(84)
(96)
Credit Cost (Annualised) AUM
2.5
3.2
4.6
2.9
2.6
2.6
5.7
2.1
2.6
50
(1)
GS 3
8,972
9,191
9,084
9,157
9,092
(1)
(1)
ECL prov stage 3
3,389
3,301
3,286
3,118
3,113
(0)
(6)
Net Stage 3
5,583
5,890
5,799
6,039
5,979
(1)
2
Coverage Ratio Stage 3
38
36
36
34
34
19
(168)
GS 1& 2
73,482
77,282
87,617
91,879
96,173
5
24
ECL prov stage 1& 2
2,148
2,280
2,364
2,341
2,604
11
14
Net Stage 1 & 2
71,336
75,002
85,253
89,538
93,568
5
25
ECL Prov (%) Stage 1&2
3
3
3
3
3
16
(24)
Business Details ()
AUM
75,323
76,281
78,761
81,612
86,357
90,019
95,306
1,00,541
1,04,380
4
21
On book Loans
63,689
64,271
65,463
68,301
71,113
74,884
79,673
82,462
87,815
6
23
Off book (Securitization)
11,634
12,011
13,298
13,311
15,244
15,134
15,633
18,079
16,565
(8)
9
Total Borrowings
51,830
51,130
53,110
55,650
72,970
59,120
63,320
71,860
88,202
23
21
AUM Mix (%)
New CV Loans
10
10
10
10
10
11
11
13
13
0
0
Used CV loans
90
90
87
87
87
86
84
87
87
0
0
Profitability
NIM
7.0
7.2
7.0
7.4
7.5
7.5
7.5
7.4
7.5
8
6
C/I
22.9
20.3
20.3
18.2
21.1
22.1
21.2
25.0
22.0
(300)
89
ROE
14.5
12.5
5.3
24.3
17.1
16.4
4.6
17.2
17.0
(18)
(8)
Source: Company, Angel Research
Oct 30, 201
2
Shriram Transport Fin Co | 2QFY2019 Result Update
Exhibit 2: AUM Break-up
1QFY18
2QFY18
1QFY19
2QFY19
% QoQ
% YoY
New
8,186
8,697
12,140
12,719
5
46
Used
71,957
74,744
83,919
86,057
3
15
Business Loan
1,197
1,615
2,978
3,314
11
105
Working Capital
1,224
1,209
1,895
2,171
15
80
Others
33
92
46
119
159
29
AUM
82,597
86,357
1,00,978
1,04,380
3
21
Source: Company, Angel Research
Exhibit 3: Annual trend of credit cost (%)
Exhibit 4: Quarterly trend of credit cost (%)
3.5
3.3
7.0
3.1
5.7
2.9
6.0
3.0
2.5
4.6
5.0
2.5
2.2
2.2
2.0
4.0
1.9
3.2
2.0
1.7
2.9
3.0
2.5
2.6
2.6
2.6
1.4
1.4
2.1
1.5
1.3
2.0
1.0
1.0
-
0.5
-
FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19E FY20E
Source: Company, Angel Research, Note-CC on AUM
Source: Company, Angel Research, Note-CC on AUM
STFC credit cost is continually inching up owing to transition of NPA
recognition from180DPD (Q3FY16) to gradually move to 90DPD in Q4FY18.
Credit cost has increased 50bps sequentially to 2.6% in Q2FY19.Howevertn
management is confident f reducing it to 2% over the coming 1.1.15 years.
During the quartet provision exp increased by 23% qoq(15%-yoy). Out of total
provision of `683 cr in Q2FY19. `60cr was adhoc provision for Kerala.
Outlook & Valuation: We expect SHTF’s AUM to grow at CAGR of 20% over FY18-
20E led by stronger CV volume, macro recovery and improving rural market. The
company’s return ration are at decade low levels (RoA/RoE - 1.9%/13% in FY18)
primarily owing to higher credit cost, which we believe to normalize FY19E
onwards, which would propel RoA/RoE to 2.8%/20.7% in FY20E. At CMP, the stock
is trading at 1.5x FY20E ABV and 8x FY20E EPS. We recommend a BUY on the
stock with a target price of `1,760 (2.7x FY2020E ABV).
Oct 30, 201
3
Shriram Transport Fin Co | 2QFY2019 Result Update
Income Statement
Y/E March ( `cr)
FY15
FY16
FY17
FY18
FY19E FY20E
NII
3,827
5,052
5,561
6,771
8,042
9,702
- YoY Growth (%)
9.5
32.0
10.1
21.8
18.8
20.6
Other Income
428
184
82
248
134
160
- YoY Growth (%)
(6.9)
(57)
(55.5)
202.9
(46.1)
19.7
Operating Income
4,255
5,236
5,643
7,019
8,176
9,862
- YoY Growth (%)
7.6
23.1
7.8
24.4
16.5
20.6
Operating Expenses
1,123
1,347
1,275
1,524
1,764
2,113
- YoY Growth (%)
14.7
20.0
(5.4)
19.6
15.7
19.8
Pre - Provision Profit
3,132
3,888
4,368
5,495
6,412
7,749
- YoY Growth (%)
5.2
24.2
12.3
25.8
16.7
20.9
Prov. & Cont.
1,289
2,107
2,444
3,122
2,905
2,773
- YoY Growth (%)
12.2
63.4
16.0
27.7
(7)
(4.5)
Profit Before Tax
1,842
1,781
1,924
2,373
3,507
4,976
- YoY Growth (%)
0.8
(3.3)
8.0
23.3
47.8
41.9
Prov. for Taxation
605
603
667
804
1,192
1,692
- as a % of PBT
32.8
33.9
34.6
33.9
34.0
34.0
PAT
1,238
1,178
1,257
1,569
2,315
3,284
- YoY Growth (%)
(2.1)
(4.8)
6.7
24.8
47.5
41.9
Balance Sheet
Y/E March ( `cr)
FY16
FY17
FY18
FY19E
FY20E
Share Capital
227
227
227
227
227
Reserve & Surplus
9,927
11,075
12,345
15,072
17,833
Networth
10,154
11,302
12,572
15,299
18,060
Borrowing
49,791
53,110
63,320
75,494
90,007
- YoY Growth (%)
12.5
6.7
19.2
19.2
19.2
Other Liab. & Prov.
8,018
9,998
12,578
14,403
17,849
Total Liabilities
67,963
74,410
88,470
1,05,195
1,25,917
Investment
1,356
1,549
1,480
1,480
1,480
Cash
2,364
4,441
3,638
3,944
4,733
Advance
61,878
65,463
79,673
95,608
1,14,729
- YoY Growth (%)
25.7
5.8
21.7
20.0
20.0
Fixed Asset
101
84
120
144
151
Other Assets
2,264
2,874
3,560
4,020
4,824
Total Asset
67,963
74,410
88,470
1,05,195
1,25,917
Growth (%)
14.6
9.5
18.9
18.9
19.7
Oct 30, 201
4
Shriram Transport Fin Co | 2QFY2019 Result Update
Exhibit 5: Key Ratio
Y/E March
FY16
FY17
FY18
FY19E
FY20E
Profitability ratios (%)
NIMs
8.7
8.5
9.1
9.0
9.1
Cost to Income Ratio
25.7
22.6
21.7
21.6
21.4
RoA
1.9
1.8
1.9
2.4
2.8
RoE
12.2
11.7
13.1
16.6
19.7
Asset Quality (%)
Gross NPAs (%)
6.20
8.20
9.15
9.0
8.0
GNPA Amt
3,870
5,408
7,376
8,605
9,178
Net NPAs
1.9
2.7
2.83
2.7
2.4
NPA Amt
1,144
1,659
2,131
2,581
2,753
Provision Coverage
69.4
67.1
69.1
70.0
70.0
Credit Cost (AUM)
2.9
3.1
3.3
2.5
2.0
Per Share Data (`)
EPS
52
55
69
102
145
ABVPS
397
425
460
561
675
DPS
10
10
11
16
23
BVPS
448
498
554
674
796
Valuation Ratios
PER (x)
21.6
20.3
16.3
11.0
7.8
P/ABVPS (x)
2.8
2.6
2.4
2.0
1.7
P/BVPS
2.5
2.3
2.0
1.7
1.4
Dividend Yield
0.9
0.9
1.0
1.4
2.0
DuPont Analysis
NII
7.9
7.8
8.3
8.3
8.4
(-) Prov. Exp.
3.3
3.4
3.8
3.0
2.4
Adj. NII
4.6
4.4
4.5
5.3
6.0
Other Inc.
0.3
0.1
0.3
0.1
0.1
Op. Inc.
4.9
4.5
4.8
5.4
6.1
Opex
2.1
1.8
1.9
1.8
1.8
PBT
2.8
2.7
2.9
3.6
4.3
Taxes
0.9
0.9
1.0
1.2
1.5
RoA
1.9
1.8
1.9
2.4
2.8
Leverage
6.6
6.6
6.8
6.9
6.9
RoE
12.2
11.7
13.1
16.6
19.7
Source: Company
Oct 30, 201
5
Shriram Transport Fin Co | 2QFY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER:
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managed public offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
Shriram Transport Fin
1. Financial interest of research analyst or Angel or his Associate or his relative
No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives
No
3. Served as an officer, director or employee of the company covered under Research
No
4. Broking relationship with company covered under Research
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
Oct 30, 201
6
