Shriram Transport Finance Company Ltd.

STFC is one of the largest asset financing NBFCs in India

  • STFC is among the leading organized finance provider for the commercial vehicle
    industry with a focus to provide various credit facilities to Small Truck Operators.
  • The Company was incorporated in the year 1979
  • STFC is a part of the “Shriram” conglomerate which has a significant presence in
    financial services viz., commercial vehicle financing business, consumer finance, life
    and general insurance, stock broking, chit funds and distribution of financial products
  • STFC has PAN India presence through wide network of 479 branches and tie up with
    500 private financiers across the country as on 31st March, 2009.
  • STFC’s NCDs are rated ‘CARE AA+’ by CARE and ‘AA (ind)’ by Fitch.
  • STFC has a strong financial track record and has total assets under management
    (AUM) in excess of INR 23,281 crores as on 31st March 2009.
  • STFC’s Net NPA levels as on 31.03.2009 were 0.83%
  • The net interest margins as on 31.03.2009 was 6.99%


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Adani Power Ltd. – Few observations from Analyst meet

The combined broker and analyst meet took place at the Regal room of the Trident on the 20th of July 2009. There were more than seven hundred people present – a record by itself pointing to some sort of euphoria being created in the market place. I am not sure whether there is some magnetic energy also generated along with electrical energy in issues which concern power generation. We all in the capital markets will remember that the primary markets virtually collapsed post the Reliance Power issue listing. Let’s hope and pray no such thing happens in this IPO.

With 700 people or more attending the meeting, I thought the question hour session would be an extended one but to my utter surprise there were just a handful of questions and they failed to even cross five in number. Probably no one was interested in questions with the IPO price not yet announced. Some elements which did come out however are being detailed below.

Firstly as recently as less than a month ago a pre – IPO placement of shares was made on 25th June 2009 to M/s 3i Power Investments AI Limited at a price of Rs 81.42 per share. The investor was allotted 91,42,139 shares. On the same date another allotment of 269,05,830 shares was allotted to a group company Capital Trade and Investment Private Limited at a substantially higher price of Rs 111.50.

In March 2009 when are markets were down in the dumps, a substantially large allotment of 705,20,033 shares was made on 31st March 2009 to a group company Ventura Power at a rate of Rs 70 only. I believe this time the greed amongst promoters and merchant bankers seems to be rising very fast and is in a multiple of the rise in the BSESENSEX and the NIFTY. One indication about pricing which was given is that the upper band would not exceed Rs 100 and the price band would be announced in the newspapers of Friday the 24th of July.

It may also be mentioned that the first government disinvestment in the form of National Hydro-Power Corporation Limited which is planning to tap the capital markets in the first fortnight of August was looking at an upper price band of Rs 20, has now changed its mind and wants to charge about Rs 30 for the same share. This is being mentioned that a small rise in the indices can change even the government’s expectation by as much as 50% why would the private sector be falling behind in any way.

I am worried about only one thing – the primary market is reviving after about 16-18 months and that is why it is being nicknamed as IPO Season 2. I hope that pricing and the greed of promoters should not bring about a pre-mature end to the IPO Season even before we have taken off and are in full swing.

Friends, i would invite you to share your views, contribute view points and also your thoughts on issues being raised and discussed. This is our site and your opinion and thoughts are most welcome.

Price Band announcement

SEBI has now allowed companies going public to announce the price band two days before the issue opens. The intention of SEBI was indeed very creditable and must have been with lot of deliberations. It however is also likely to lead to lot of confusion. Issues open around the beginning of the week typically on Monday and Tuesdays and close at the end of the week. Road shows for the same open three/four days in advance so that when an issue is opening on Monday the road show would be on Wednesday onwards. Analysts from the media houses and broking houses are typically headquartered in Mumbai and prepare reports and discussion papers on the issue based on their discussions at the road show. When there is no price band disclosed it is akin to attending a wedding reception without the bride and the bridegroom.

Discussion at a road show centres around three points. The present business of the company and its prospects and what is the sector all about. Secondly it discusses the future prospects and profitability. The third element is about valuation and whether investment is warranted or not and at a given price. We all know that everything is good or bad at a price. No company need be good at any or every price and similarly no company is bad at every price. Any discussion without a price is like shooting arrows in the air. Any assumptions made would be meaningless and the company would get no idea about the feedback that the price band has generated. The biggest casualty of this would be that the price band being decided and announced so late would give no opportunity to discuss price, and articles which appear in the press on public offerings may not carry the required comments for investors to make meaningful judgement on their investments.

There is an issue opening next week of Adani Power on 28th July and they are having their road show today in Mumbai. I would be discussing some of the points on this issue from tomorrow onwards. They have yet to announce the price band and this could be an interesting case to talk about.

Please log in tomorrow to read reactions on this issue, probably the first mega issue of IPO SEASON 2.

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