|Date||Tipwala Reco||Timeframe||CMP||Target||Sell Decision|
|12-Oct-2014||Buy Shriram Transport||2 Months||Rs. 875||Rs. 950-1000||Time Frame or Target|
Along with the general market correction, Shriram Transport has corrected 12% from its recent highs of Rs.990. We believe that it’s a good opportunity to enter the stock given that there are a number of positive triggers in the near term.
The recent decline in global crude oil prices will ensure that diesel prices in India will come down. Lower diesel prices will benefit the entire transportation sector by improving the cashflows of the truck operators. Shriram Transport is India’s largest lender to the truck operators and will witness better asset quality in the coming quarters on account of its customers witnessing better cash flows.
Also, the commercial vehicle sales have shown a positive trend in the month of August and September’14 due to pick-up in the truck replacement demand. This will ensure that Shriram Transport witnesses 10-15% loan book growth in coming quarters. Valuations based on future book value are attractive considering the improving future outlook and dominant position of Shriram Transport.
We recommend accumulating Shriram Transport at the current price of Rs. 880 from a two months perspective.