Outlook & Valuation: We expect STFC’s AUM to grow at CAGR of 11% over FY2019-21E primarily owing to (1) post-election government to increase spending on infra project (macro recovery), and (2) pre-buying of CV before the BS VI and consequently improvement in pricing of older vehicles to improve asset quality. We expect STFC to report RoA/RoE of 3%/18.3% in FY2021E. At CMP, the stock is trading at 1.2x FY2021E ABV and 7x FY2021E EPS, which we believe is reasonable for a differentiated business model with return ratios. We recommend a BUY on the stock with a Target Price of Rs.1,410.

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