The share price of Shriram Transport Finance jumped 14 percent on Friday on the back of better-than-expected December quarter results. The sentiment was also lifted after global brokerage house CLSA upgraded the stock and raised its target price.

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The company's results surprised positively with better-than-expected asset quality and improving growth/NIMs. However, it reported a 17 percent decline in net profit at Rs 727.72 crore for December quarter 2020-21 as it made additional provisions related to the COVID-19 pandemic.

The stock rose as much as 14 percent to its day's high of Rs 1,266.65 per share on the BSE.

The key net interest income rose to Rs 2,148.22 crore from Rs 2,113.75 crore in the same period of the previous year. Asset quality also improved as Gross NPA and Net NPA as of December 2020 stood at 5.33 percent and 3.22 percent, respectively, as against 8.71 percent and 6.09 percent by the same period a year ago. These accounts have been classified as stage 3 and provisioned accordingly. Had the company classified these borrower accounts as NPA after August 2020, the Gross NPA and Net NPA ratio would have been 7.11 percent and 4.31 percent, respectively, it said.

Meanwhile, CLSA upgraded the stock to 'buy' from 'outperform' rating and raised its target price to Rs 1,450 per share from Rs 1,400 earlier. It also increased earnings estimates by 16-48 percent.

"Shriram Transport already has a high market share in the mature used CV financing market and hence long-term growth for the company will lag industry growth. In the near to medium term, it is a good play on the cyclical recovery and easy liquidity environment," said the brokerage.

Total assets under management of the largest asset financing NBFC in the country stood at Rs 1,14,932.06 crore compared to Rs 1,08,931.38 crore by December 2019.