HDFC Securities maintains Reduce call on Sundaram Finance; target price Rs 4,410
ADVERTISEMENT Sundaram Finance's key products/revenue segments include Interest, Dividend, Fees & Commission Income, Lease Rentals, Income From Sale Of Share & Securities, Bad Debts Recovery and Other Services for the year ending 31-Mar-2024.
Financials
For the quarter ended 31-03-2025, the company has reported a Consolidated Total Income of Rs 2300.22 crore, up 4.21% from last quarter Total Income of Rs 2207.35 crore and up 6.63% from last year same quarter Total Income of Rs 2157.27 crore. The company has reported net profit after tax of Rs 553.53 crore in the latest quarter.
The company's top management includes Mr.S Viji, Mr.R Venkatraman, Dr.Kshama Fernandes, Mrs.Bhavani Balasubramanian, Mr.R Raghuttama Rao, Mr.L Ganesh, Mr.S Mahalingam, Mr.T T Srinivasaraghavan, Mr.Srivats Ram, Mr.A N Raju, Mr.Rajiv C Lochan, Mr.Harsha Viji, Mrs.Anuradha Rao. Company has B K Khare & Co. as its auditors. As on 31-03-2025, the company has a total of 11 crore shares outstanding.
Investment Rationale
ADVERTISEMENT Sundaram Finance (SUF) reported a steady set of earnings with sustained reflation in NIMs and muted provisioning (-1bps), offset by lower other income. AUM growth marginally moderated further to +17% YoY (Q3FY25: 19% YoY; FY24: +27% YoY), driven by subdued disbursements (+11% YoY; +9% YoY for FY25) across segments, except cars and CE segments. Disbursement uptick remains a key monitorable as the overall CV and PV cycles remain soft. SUF?s product diversification strategy and interest rate reduction environment are likely to aid further reflation in NIMs. While SUF remains a pristine franchise with steady growth and profitability metrics (core RoE of 19% for FY25), current valuations provide limited upside amidst growth headwinds. HDFC Securities expects moderation in loan growth over FY26-FY27E (16% CAGR vs. 20% CAGR over FY23-FY25). The brokerage has tweaked its FY26E/FY27E earnings estimates for lower cost of funds and maintain a REDUCE rating with a revised SoTP-based target price of Rs 4,410 (standalone entity at 3.4x Mar-27 ABVPS; 17% discount to CIFC).
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Disclaimer: Views and recommendations given in this section are the analysts' own and do not represent those of ETMarkets.com. Please consult your financial adviser before taking any position in the stock/s mentioned.
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