The Shriram Transport Finance stock gained in early morning trade today after the firm said its unlisted entity SVL Ltd would honour debenture repayment obligations. The stock of non-bank lender rose as much as 9.18% percent to 1250 level, its biggest intraday percent gain since April 5.
At 10:01 am, the stock was trading 1.49% higher at 1161 on the BSE.
The stock has clocked 6.18% gains during the last one year. It has fallen 21.47% since the beginning of this year.
The stock plunged up to 18% on Wednesday after Shriram Transport Finance's annual report mentioned a Rs 870-crore corporate guarantee which the firm provided to its unlisted entity SVL Ltd.
The guarantee is with respect to non-convertible debentures issued by SVL Ltd.
Late Wednesday, the firm issued a statement saying the NCDs fall due for maturity after a year from now in June'2019. SVL Limited, its Promoters / Promoter Group, and its associates, have enough resources to honour the payment of this loan whenever due and payable has reassured the same.
Shriram Transport Finance said it had given corporate guarantee in connection with issue of non-convertible redeemable debentures (NCD) issued by SVL Limited in June' 2015. Apart from this corporate guarantee, STFC has not extended any fresh guarantee for SVL Limited. The corporate guarantee is secured by pledge of shares of SVL Limited, Shri Ram Transport Finance said.
A note by Jefferies on Wednesday said with SVL/subsidiaries likely under financial stress, NCD repayment may be an issue. Other group cos could aid in repayment, but if guarantee is invoked and liability devolves on Shriram Transport Finance, its book value may be hit by 4 to 5%.