Buy Shriram Transport Finance Company, target Rs 1420: Deutsche Bank Research

Deutsche Bank Research has Buy call on Shriram Transport Finance Company Ltd. with a target price of Rs 1420.0. The current market price of Shriram Transport Finance Company Ltd. is 1295.0. Time period given by analyst is year, when Shriram Transport Finance Company Ltd. price can reach defined target. The growth is picking up but net interest margins (NIMs) have declined. The global investment bank believes the company should be able to deliver strong earnings growth at a CAGR of 35 per cent over FY16-18E. Earnings growth is likely to drive 400 bps expansion in return on equity (RoE) to 16 per cent in FY18E. Valuations at 2.2 times FY18E P/B have moved up, but they still remain at comfortable levels. Deutsche Bank believes that declining rates and a good monsoon are likely to result in an increase in recoveries. It forecast a 20 per cent CAGR growth in AUM over FY16-18.