CRISIL revises Shriram Transport outlook to negative from stable

The country’s leading commercial vehicle finance company-Shriram Transport Finance Co. Ltd reported another credit downgrade of its bank facilities and debentures, on Thursday. Since March, this is the fourth rating downgrade, which the company has been assigned from different agencies.

The company released a press note on stock exchanges which stated that CRISIL has downgraded its outlook from ‘stable’ to ‘negative’. The major reasons for these downgrades are challenging operating conditions and expectation asset quality weakness. Rating agencies also kept the delayed loan collections and asset recoveries. Having a high percentage of exposure to retail credit profile, the borrowers of the company are small road transport operators. These players have run businesses with low truck utilisation due to the weak economic activity.

The rating agency also focussed on the strong liquidity position of the company. Its statement said that the liquidity stood around Rs 4,500 crore (cash as well as CC & WCDL) and Rs 13,000 crore from sanctioned term loans, debentures etc. While that in short-term, it will have a repayment obligation of Rs 4,313 crore in the current quarter. The downgrades for NBFC are more focussed on these near-term obligations in a scenario of such sharp drop in loan recoveries.

The stock opened nearly three per cent higher on Friday at Rs 780.40 on BSE.