Shriram Transport Finance rises 3% as Morgan Stanley sees 34% upside

Shriram Transport plunged 31 percent to trade below Rs 1,000 levels in October, but since then, it managed to gain 20 percent in last more than one-and-half-month.

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NBFC Shriram Transport Finance Corporation shares gained nearly 3 percent in morning on Thursday after global investment firm Morgan Stanley said it expects 34 percent upside in the stock to Rs 1,515 per share.

While assigning overweight call on the scrip, the research house said valuations are attractive at current levels, though asset under management (AUM) growth is likely to moderate in the near term and net interest margin will moderate over the next couple of quarters.

IL&FS-led liquidity crisis hit non-banking finance companies scrips badly in September. Amongst them, Shriram Transport plunged 31 percent to trade below Rs 1,000 levels in October, but since then, it managed to gain 20 percent in last more than one-and-half-month.

Impact of lending rate increases will lag increase in cost of funds, Morgan Stanley said, adding it expects credit costs to keep trending lower & settle at around 2.1 percent in FY20.

At 11:07 house IST, the stock was quoting at Rs 1,161.55, up Rs 30.65, or 2.71 percent on the BSE.

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