Shriram Transport bounces back

Despite posting a big 70% (YoY) decline in consolidated net profit at Rs.223 crore for Q1FY20, Shriram Transport Finance stock price is up in the green.

The immediate knee jerk reaction – from its close of Rs.635 yesterday, it opened lower at Rs.615 and even went down to an intraday low at Rs.605 but from there, it rose to Rs.675.75 and is now trading at Rs.648, up 2%.

The market realized that the drop in profit was mainly on account of the credit loss provision of Rs 910 crore the company made on account of the Covid-19 impact. Total loan loss provision was Rs 1129 crore for the quarter, more than double compared with Rs 540 crore (YoY).

The company said, that it has used relevant indicators of moratorium, considering various measures taken by government and other authorities along with an estimation of potential stress on probability of defaults and loss given defaults due to COVID-19 situation.

The company’s total income was up 7% at Rs.4173 crore.

It has loan repayment collection is improving – it rose to 52% in May v/s 23% in April with Rabi harvesting and kharif sowing beginning.