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Shriram Transport Finance Company Ltd (updated - 19 May 2009)
At a time when sales of new commercial vehicles (CVs) have been weak, Shriram Transport Finance’s March 2009 quarter numbers have been reasonably good. The near 27 per cent year-onyear rise in interest income, however, was far lower than the 50-70 per cent growth seen in the first three quarters of 200809.

About 70-80 per cent of Shiram’s outstanding loans are accounted for by second-hand trucks and, in the March 2009 quarter too, most of the money was lent for used trucks. Higher interest expenses pushed down the net interest margin to 6.89 per cent and capped the rise in the net interest income to 18 per cent. While gross non performing loans were up by nearly 50 basis points to 2.14 per cent year-on –year, the loan book is relatively clean and that’s creditable given that most of its customers are individuals.

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Shriram Transport Finance Company Ltd (updated - 27 Mar 2009)
Even the second-hand truck market seems to be slowing down. Shriram Transport’s Managing Director R Sridhar says his company will grow at a more subdued 20 per cent in 2009-10, way below the 59 per cent rise in revenues seen in nine months to December 2008. The Rs 2,451-crore firm, which lends more to small truck operators, says there are fewer takers for loans at a time when industrial activity is slowing down. So although prices of diesel may be coming off, fleet operators aren’t really overloaded with goods to be transported and so don’t need more trucks. Of course, as Sridhar points out, essential commodities need to be carried but that doesn’t really call for more trucks on the road.

That’s why his firm’s income from operations grew by just 48 per cent in the December 2008 quarter, lower than the 65 per cent growth seen in the first half of 2008-09. Not surprisingly, the increase in net profits at 34 per cent too was not as good as in earlier quarters with interest costs having gone up sharply. What’s worrying analysts though is that some loans could go bad; a CLSA report reckons gross non performing assets (NPAs) could be around 3 per cent of assets next year—at the end of December 2008, NPAs stood at 1.9 per cent. So it’s probably not a bad thing if the loan portfolio, which grew at around 62 per cent last year and 36 per cent in the December 2008 quarter, doesn’t expand too much right now, even if it means losing market share. The stock may appear cheap at 6 times estimated 2009-10 earnings but it be worth it to watch the environment for while.
source - businessstandard

Since money is more easy to access and has become cheaper, life could be easier for Shriram Transport from now on. The company lent more in the March quarter than it did in the December 2008 quarter and its possible it could lend about 20 per cent more this year than it did last year. That could mean an increase in net profits of a compounded 20-22 per cent in the next couple of years, given that the economic environment appears to be getting better. At the current price of Rs 275, the stock trades at just under two times price to estimated 2009-10 adjusted book value.
source - businessstandard