The Hindu Business Line : Shriram Transport and Shriram Investments: Buy

Both these stocks are attractively valued considering their earnings growth record and growth potential. These stocks offer a dividend yield of 4 per cent and are trading at a price-to-earnings multiple of about 8.

Shriram Investments and Shriram Transport are part of the Shriram Group, which is one of the leading truck financing players in India. The group manages the truck financing business for other banks and institutions for a fee apart from lending on its own. Profit growth recorded by these firms over the past few years have been impressive. Robust growth in lending of about 10 to 15 per cent is likely.

The financial profile, size, shareholding pattern and profitability of these two companies are similar. A number of institutional investors such as Citicorp Finance, UTI Bank and Reliance Capital have picked up equity stakes in these two firms. ChrysCapital, a private equity firm, also picked up a 20 per cent stake in both these firms in January 2005 and is now the dominant investor. Both these firms may be merged by the end of the year and this would be a positive.

Suresh Krishnamurthy

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