Kotak maintains buy rating on STFC

By siliconindia   |   Friday, 19 June 2009, 23:26 IST   |    1 Comments
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Kotak maintains buy rating on STFC
Bangalore: Kotak Securities recommends to buy Shriram Transport Finance Company (STFC) stock, with a price target of Rs 350. STFC is a non-banking financial company providing finance in the pre-owned commercial vehicle (CV) segment. With the recommended target price, if the stock is bought at today's closing price of Rs 287, the percentage of gain would be 21.95 percent. According to Kotak, due to the unfavorable macroeconomic scenario, which prevailed during FY09, the demand for CV was impacted as the freight rates were under pressure. Demand for CV usually moves in sync with industrial growth. The freight rates are stabilizing now and improvement in the overall business sentiment will be positive for STFC. Kotak feels that STFC is well positioned to tap future business opportunities, and is expected to be an early beneficiary of the revival in economy. The one year stock price is on the left. Kotak expects a 20 percent year-on-year (YOY) growth in STFC's advances and a 20 percent YOY growth in net profit during FY10 and some improvement in its asset quality. With improvement in industrial growth outlook, stabilization in freight rates, Kotak has a positive bias for STFC's future growth outlook.

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