Shriram Transport - 4QFY13 Results Update - Motilal Oswal

Shriram Transport's (SHTF) 4QFY13 PAT grew by 14% YoY and 3% QoQ to ~INR3.55b (3% below our est). While net income was in line with estimate, marginally higher-than-estimated Opex and provisions led to 3% lower-than-estimated PAT.

Key highlights:

- Disbursement and AUM growth has picked up sharply in FY13, average sequential growth in AUM stood at INR23b in FY13 v/s INR10b during FY12. AUM grew 23% YoY and 3.6% QoQ at INR493b, while disbursements for the quarter stood at INR77b, up 54% YoY and 10% QoQ. Notably, the disbursement growth was led by used vehicles (INR66b) growth of 66% YoY and 12.2% QoQ.

- NII (including securitization income) grew 11% YoY and flat QoQ to INR8.9b, driven by healthy AUM growth; however, NIM on AUM declined 29bp QoQ to 7.23%. The sequential decline in reported margins could be attributed to 1) decline in asset yields due to a change in asset mix in favor of relatively low yielding newer vehicles, 2) higher interest cost due to increased proportion of high cost bank borrowing and 3) lower incremental spreads on securitization portfolio.

- GNPAs increased ~13% QoQ and GNPAs in relative terms rose 31bp at 3.2% (v/s 2.89% in 3QFY13).

Valuation and view: While SHTF's return ratios have moderated, compared to its historical trends, we expect RoA of 2.5% and RoE of 19%+ over FY14E/15E. SHTF trades at 1.9x/1.6x FY14E/15E consolidated BV and 10.3x/9x FY14E/15E consolidated EPS. Maintain Buy with a target price of INR825 (1.8x FY15E consolidated BV).

Source : Equity Bulls

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