Shriram Transport Finance tanks 18 per cent

Investors slammed the stock of Shriram Transport Finance in the morning session on Wednesday due to an off-balance sheet liability of Rs. 871.76 crore.

This off-balance sheet liability pertains to the corporate guarantee given by the Shriram Transport Finance to its unlisted subsidiary SVL Ltd, a non-financial business of Shriram Group.

SVL’s subsidiary Shriram EPC has been referred to NCLT. This represents a key risk which overhangs on Shriram Transport Finance, because if this guarantee is invoked, then the liability will be transfer to Shriram Transport Finance. This will in turn impact on the book value of Shriram Transport Finance.

The stock of Shriram Transport Finance witnessed a gap-down opening with almost an open-high which suggested some more downside during the session. Likewise, the stock tumbled more than 15 per cent with a spurt in volume by more than 11.4 times. On the weekly time frame, the stock had given a kind of multiple resistance breakout near 1,330 levels. However, it witnessed a retreat after hitting all-time high levels and has drowned below its multiple resistance levels as if for a pullback.

At 11.38 am on Wednesday, the stock of Shriram Transport Finance (SRTRANSFIN) was trading at Rs. 1,096 per share, down by almost 15.6 per cent from its previous close of Rs. 1,298.5.