Prabhudas Lilladher is bullish on Shriram Transport Finance has recommended buy rating on the stock with a target price of Rs 1568 in its research report dated April 22, 2019.
We evaluated likely impact of a merger between Shriram Transport Finance (SHTF) and Shriram City Union Finance (SCUF) and believe that it will unlock value for shareholders. Merger of SHTF+SCUF would see holding company i.e. Shriram Capital getting listed as a full-fledged financial services firm spread across NBFC, housing and insurance arm and pave way for exit of PE players, thus removing overhang on valuations. Merger will drive synergy benefits given a loan book of ~Rs1326bn, lower concentration risks, diversified liability profile, increase in Tier I capital and can also improve credit ratings.