Shriram Transport Finance share price: Add Shriram Transport Finance Company, target price Rs 1552: HDFC Securities

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HDFC Securities called on Company Ltd. with a target price of Rs 1552.

The current market price of Shriram Transport Finance Company Ltd. is Rs 1380.8. The period given by the analyst is one year when the price of Shriram Transport Finance Company Ltd. can achieve the defined goal.

Shriram Transport Finance Company Ltd., incorporated in 1979, is a large cap company (having a market capitalization of Rs 37,144.55 crore) operating in the NBFC sector.



The main products / revenue segments of Shriram Transport Finance Company Ltd. include interest, fees and commissions, other operating income, income from financial services, income from the sale of stocks and securities and rental income for the year ending March 31, 2021 .

Finance

For the quarter ended 30-09-2021, the company reported consolidated total income of Rs 4,702.81 crore, up 1.10% from last quarter total income of Rs 4,651.50 crore and up by 8.08% over the total income for the same quarter of last year of Rs 4,351.26 crore. The company reported net profit after tax of Rs 771.24 Crore in the last quarter.


Justification of the investment
Shriram Group announced the long-awaited reorganization of its group structure; while the non-loan subsidiaries (general insurance and life insurance) would be placed outside the merged entity, Shriram City Union Finance (SCUF) and Shriram Capital would be merged into Shriram Transport (SHTF) to form Shriram Finance (the project of entity merger). At yesterday’s closing price, the share exchange ratio indicates a favorable ratio for SCUF. While the re-jig was inevitable, the brokerage believes the proposed merger is unlikely to generate significant revenue or operating profit, and the super-app strategy carries significant execution risk. Despite the high probability of regulatory approval, forecasts for fiscal years 22 to 23 remain unchanged. It maintains ADD with an unchanged target price of INR 1,552.

Promoter / FII Holdings
Promoters held 25.58 percent of the company’s share capital as of September 30, 2021, while FIIs held 53.67 percent and DIIs 14.82 percent.

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