InvestorQ : Why have the profits of Shriram Transport Finance fallen in the last quarter? Should I hold or sell out of the stock?
Jignesh Gupta made post

Why have the profits of Shriram Transport Finance fallen in the last quarter? Should I hold or sell out of the stock?

Answer
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Maniish Lofar answered.
1 year ago


Like most NBFCs, Shriram Transport Finance Ltd (STFL) has also been facing the same problems like most NBFCs of liquidity tightness and higher cost of funds. For the March 2019 quarter, STFL reported 22% fall in net profits to Rs.746 crore. Total income for the March quarter was up by 8% at Rs.3880 crore. The company has managed to grow its AUM to Rs.1.04 trillion even in these tough market conditions.

Most NBFCs are likely to face the pressure of liquidity and higher cost of funds and that is likely to show up in their numbers. Also, some of these financers have seen a tendency for NPAs to rise in such times, which also could be a drag on profits. You will remember that there was supposed to be a merger deal between Shriram Transport Finance and IDFC Bank, which did not materialize. The largest shareholder, Mr. Piramal, has also been looking at exit opportunities on the stock. For the short to medium term the stock is likely to remain under pressure and it may be a good decision for you to come out for now.