CRISIL stated that that the growth opportunity in the pre-owned CV financing business remains strong, given that a large proportion of the financing requirement is still being catered by the un-organised market comprising local money lenders, coupled with the replacement demand for more than three million units of CVs sold over the past five years.

The cash flows of transport operators are improving due to lower diesel prices, likely pick-up in industrial activity, easing of infrastructure constraints and lower inflation resulting in expected higher capacity utilisation of CVs and in turn higher collection efficiencies for CV financiers.

CRISIL report highlights that Shriram Transport Finance (STFC) will sustain its strong competitive position in the pre-owned CV financing market and benefit from the sound growth potential for this segment over the medium term.

CRISIL's rating upgrade of Shriram Transport Finance for its fixed deposits programme from FAA +/Positive to FAAA/Stable, NCD from AA/Positive to AA+/Stable, long term bank facilities from AA/Positive to AA+/Stable, reflects improving outlook for CV sector.

STFC has been gradually expanding into rural markets and has set up 776 rural centers (up to Mar. 31, 2015) to tap this opportunity. As per the CRISIL report, STFC has strong structural advantages over its peers, which will support its above-average growth plans and enable it to maintain its leadership position in the pre-owned CV financing segment over the medium term.

STFC is the largest CV financier in the country. Pre-owned CV financing constituted about 91% of the company's assets under management (AUM) of Rs 591 billion as on Mar.31, 2015.

Commenting on CRISIL ratings upgrade and the business outlook, Umesh Revankar, MD, STFC said, ''We are pleased on getting an upgrade from CRISIL. This will be a huge benefit to the company especially at this juncture when the economy is reviving. We will be better placed to raise resources at lower cost both from the bond market and also from banks.''

''Currently, we are witnessing active uptake in the heavy new vehicle and used CV space. The re-sale value of vehicles is looking better and the demand is quite good in many states,'' he added.