Comments
HDFC Securities
Shriram Transport Fin (Buy)
Target: ₹1,552
CMP: ₹1,384.75
Shriram Group announced the long-awaited re-jig of its group structure, while the non-lending subsidiaries (general insurance and life insurance) would be placed outside the merged entity, Shriram City Union Finance (SCUF) and Shriram Capital are slated to be folded into Shriram Transport (SHTF) to form Shriram Finance (the proposed merged entity).
At Monday’s closing price, the share-swap ratio indicates a favourable ratio for SCUF.
While the re-jig was inevitable, we believe the proposed merger is unlikely to generate meaningful revenue or opex benefits, and the super-app strategy entails significant execution risk. Despite the high likelihood of regulatory clearance, our forecasts for FY22-FY23 remain unchanged. We maintain ‘Add’ with an unchanged target price of ₹1,552; in fact, we expect CIFC, our conviction pick, to benefit indirectly from the merger overhang as SHTF prioritises integration over its flagship business.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.