Emkay Global Financial has given Buy recommendation for Shriram Transport Finance with a target price of Rs. 1680 in its research report issued on Jun 07, 2021

Emkay Global Financial’s report on Shriram Transport Finance

Shriram Transport Finance (SHTF) has informed the exchanges about fresh issuance of capital through equity shares and warrants worth Rs5bn by way of a preferential allotment to existing Promoter Shriram Capital. The Floor Price of the equity shares and warrants is determined as Rs1,440 per equity share and per warrant, which is approx. 4% discount to CMP. The company had obtained board approval for raising up to Rs25bn in capital last year. Of this, Rs15bn was raised through rights issuances in FY21. SHTF has obtained fresh approval for the issuance of up to Rs40bn during current financial year. As per the management, raising capital up to Rs40bn will be sufficient for the company’s near- to midterm growth and liquidity requirements.


We are not incorporating the current issuance to our estimates as it has only nominal impact on growth and profitability. We will wait for more clarity over further capital raise. Maintain Buy and OW in EAP, with a TP of Rs1,680, corresponding to ~1.6x FY23E P/Adj. Book.