Slow commercial vehicle sales cap upsides for Shriram Transport Finance

As disbursements weaken, loan growth may come under pressure; the company's possible merger with Shriram City Union also an overhang

Shriram Transport Finance reported a net profit of Rs 746 crore in the January-March quarter of 2018-19 — down over 22 per cent from the same quarter a year earlier. The stock did not react adversely to the quarterly numbers, given weak expectations from the commercial vehicle (CV) financier, but that does not ease the pain beneath the surface.

With CVs comprising 84 per cent of its loan book, the company’s overall disbursements during the quarter declined by over 20 per cent when compared with a year ago, limiting its assets under management (AUM, or loan assets plus investments) growth