Overview of Shriram Transport Finance Company
Shriram Transport Finance Company (STFC) is a non-banking financial company that provides loans for transportation vehicles and equipment. It was established in the year 1979 and over the years has emerged as one of the leading NBFCs in the Indian financial market.
STFC has a pan India presence with over 1,600 branches and has funded over 1.1 million pre-owned vehicles. The company caters to the commercial vehicle market, including trucks, buses, and other small commercial vehicles. Apart from lending, STFC also provides private equity and investment banking services.
The company's core values are integrity, transparency, and customer satisfaction. STFC prides itself on providing easy and affordable loans to its customers by leveraging its expertise and experience in the commercial vehicle financing sector.
As of March 31, 2021, STFC has a loan book worth Rs. 1,08,568 crores with a customer base of over 26 lakh borrowers. The company's loan book primarily consists of loans to small businesses and individuals with a focus on semi-urban and rural areas.
Moreover, STFC is a part of the Shriram group, which has a strong presence in the financial services sector. The group has interests in various sectors such as insurance, asset management, and retail finance. Shriram Transport Finance Company is the flagship company of the group and contributes significantly to its overall growth and profitability.
Historical Share Price Performance
Shriram Transport Finance Company Limited (STFC) is a non-banking financial company (NBFC) headquartered in Mumbai, India. The company is involved in commercial vehicle finance, consumer finance, and other related activities. Shriram Transport Finance went public in 1986, and since then, the company's shares have been listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The company's stock symbol is SHRIRAMCIT.
Since the company's listing, the Shriram Transport Finance share price has shown a considerable amount of growth. In the early years of the company's listing, the stock price was relatively stable, mostly trading between INR 15-20 per share. However, beginning in the early 1990s, the company started experiencing significant growth, and this was reflected in the share price.
From 1990 until the early 2000s, the Shriram Transport Finance share price rose steadily, eventually hitting INR 1,000 per share in 2005. However, like many stocks, the company's share price was affected by the global financial crisis, which had a significant impact on the Indian economy between 2008 and 2009. As a result, the Shriram Transport Finance share price fell sharply from INR 1,000 to around INR 300 per share.
Fortunately, the company quickly recovered from the downturn and has since continued its growth trajectory. In 2015, the Shriram Transport Finance share price hit INR 1,500 per share, showing a growth rate of 400% since the stock hit its low point in 2009. As of June 2021, the Shriram Transport Finance share price stands at around INR 1,400 per share.
Looking ahead, the Shriram Transport Finance share price seems likely to continue its upward trajectory. The company has a solid reputation and a strong focus on transportation financing, and the demand for commercial vehicles is expected to rise in the coming years. Additionally, the company has several growth opportunities, including expanding into consumer finance and asset management. These factors, combined with the Indian government's push to improve transportation infrastructure, should provide a significant boost to the company's growth in the coming years.
Factors Affecting Shriram Transport Finance Share Price
Shriram Transport Finance Company Ltd (STFC) is a leading finance company providing loans for commercial vehicles such as trucks, trailers, and buses. Being one of the largest Non-Banking Financial Companies (NBFC) in India, STFC's shares are actively traded in the stock market. The share price of STFC is influenced by various internal and external factors that affect the performance of the company. Let's have a look at the key factors affecting the Shriram Transport Finance share price.
1. Economic Indicators
The share price of STFC is influenced by the economic indicators of the country. The performance of the commercial vehicle industry is dependent on the economic growth and demand for transportation. Economic indicators such as Gross Domestic Product (GDP), inflation, and interest rates have a direct effect on the business of STFC. If the GDP is growing, it will enhance the demand for commercial vehicles and positively impact STFC's business. When inflation is high, it can increase the cost of borrowing and affect the profitability and share price of STFC. Similarly, if the interest rates are high, the company's borrowing cost will increase, reducing its profitability, and negatively affecting its share price.
2. Competition
As competition within the commercial vehicle finance sector increases, it can negatively impact the market share of STFC. The emergence of new players and competitive rates can lead to a decrease in STFC's business and affect its profitability and stock price. However, STFC's strong brand presence, diverse product offerings, and technology-driven business operations can give the company an edge over its competitors.
3. Company Performance
The performance of the company is a major factor that determines the share price of STFC. Investors closely monitor the company's quarterly or annual results, including its revenue, profit margins, and loan disbursal trends. A consistent track record of revenue and profit growth usually results in higher dividends and better returns for investors, leading to an increase in the share price. Factors such as increasing Non-Performing Assets (NPAs) and deteriorating asset quality may result in a decrease in share price.
Additionally, STFC's efforts in adapting to changing market conditions, expanding its customer base, and improving its digital presence are critical factors that can impact its share price. The company's ability to innovate and leverage technology to enhance its customer experience can result in an increase in market share and profitability, positively impacting its share price.
Conclusion
The share price of STFC is influenced by various internal and external factors. Investors must conduct thorough research and gain an understanding of these factors before investing in the company. The company's strong brand presence, diverse product offerings and innovative technology-driven operations, and consistent performance have contributed to its strong market position. However, investors must track its economic indicators, the competitive landscape, and changes in company performance to make informed investment decisions.
Analysis of Current Share Price Trends
Shriram Transport Finance Company Ltd (STFC) share price has been underperforming the market for the past few months. The stock has corrected almost 25% from its high of Rs. 1440.70, registered on 95th February 2021. Though the stock price has recovered almost 30% from its low of Rs.903.90, seen on 12th May 2021.
STFC's share price had been trending higher since August 2020, and investors had high hopes from the company; however, the surge in COVID-19 cases, among other factors, affected the stock's performance in the short term.
The stock seems to have been stuck in a downtrend and continues to be a laggard in 2021; experts believe the downtrend could continue in the short term.
The company's fundamentals, historical financials, and the overall sector outlook still look great, so the current dip could be an opportunity to accumulate the stock for long-term investors.
The stock has recently moved above its 50-day and 200-day Simple Moving Averages (SMA), signifying a bullish trend. The stock has strong support near the Rs.1000-1020 levels and resistance near the Rs.1250 levels.
Traders and investors could look for an entry near these levels or wait for a breakout above the resistance levels.
The Relative Strength Index (RSI), a key technical indicator, has also moved into the bullish zone, indicating that the stock could maintain its bullish trend.
The company's management has a strong track record of expanding its business, with a focus on the rural sector and commercial vehicles financing. They have been taking steps to reduce their reliance on banks for funding and have been issuing bonds and commercial paper to diversify their funding sources.
The company also has strong financials, with a return on equity (ROE) of over 15% and a healthy debt-to-equity ratio. The company's margins have also improved in recent years, and analysts expect continued margin expansions in the future.
STFC's overall sector outlook also looks stable, given the Indian government's focus on the infrastructure and transportation sector, which is expected to drive demand for commercial vehicles and financing.
In conclusion, STFC's share price has been underperforming the market in the short term, but the company's fundamentals and overall sector outlook still look strong. The stock seems to have found support, and technical indicators suggest a bullish trend in the short term. Traders and investors could look for an entry near key levels or wait for a breakout. Long-term investors could use the current dip as an opportunity to accumulate the stock, given the strong fundamentals and growth prospects from the rural and commercial vehicles financing sectors.
Current Status of Shriram Transport Finance Share Price
Shriram Transport Finance, which deals in financing commercial vehicles, has had a good run in the past few months. The company's stock price has shown a steady trend, and it has remained resilient despite the ongoing pandemic. The company has done well in the recent past, but what does the future hold for it? Let's take a look at the future outlook for the Shriram Transport Finance share price.
1. The Impact of COVID-19 on Shriram Transport Finance
The ongoing COVID-19 pandemic has affected the entire world, and the financial sector is no exception. However, despite all the challenges, Shriram Transport Finance has done remarkably well over the past year. The company has maintained a healthy financial position, thanks to its diversified loan portfolio that includes financing for tractors, passenger cars, and other vehicles. Shriram Transport Finance has relatively less exposure to passenger cars, which have been severely impacted by the pandemic. This has worked in the company's favor, and it has been able to avoid losses in this sector.
2. Growth Prospects for Shriram Transport Finance
Shriram Transport Finance has shown consistent growth over the years, and the company is expected to continue on its growth trajectory in the coming years. The demand for commercial vehicles is likely to increase in the near future, thanks to the government's focus on infrastructure development and the growth of the e-commerce sector. The company's strong position in the market and its diversified loan portfolio make it well-equipped to take advantage of this growth and expand its business.
3. Risk Factors for Shriram Transport Finance
As with any company, Shriram Transport Finance also faces certain risks. The primary risk faced by the company is a slowdown in the economy. If the economy doesn't recover soon, it could impact the demand for commercial vehicles, which, in turn, would impact the company's business. Additionally, any adverse regulatory changes could also negatively impact the company's growth prospects. It's important for investors to analyze these risks carefully before investing in the company.
4. Analyst Recommendations for Shriram Transport Finance
Several analysts have been bullish about Shriram Transport Finance's prospects and have given a buy recommendation on the company's stock. Analysts believe that the company's diversified loan portfolio and its strong position in the market make it a good investment option. However, investors should always conduct their own research before making any investment decisions.
5. Conclusion
In conclusion, Shriram Transport Finance has performed well in the past year, despite the challenges posed by the ongoing pandemic. The company has shown consistent growth over the years, and the demand for commercial vehicles is likely to increase in the near future. Additionally, the company's strong position in the market and its diversified loan portfolio make it attractive to investors. However, investors should carefully analyze the risks before investing in the company. Overall, Shriram Transport Finance has a bright future ahead, and investors could benefit from investing in the company's stock.