Goal: ₹5,570
CMP: ₹4,652.95
Sundaram Finance reported robust AUM progress at 19 per cent y-o-y vs 20 per cent y-o-y (Q2-FY25) led by robust disbursements progress. Disbursements grew by 19 per cent led by market share good points throughout property. Asset high quality deteriorated barely; nevertheless, it continues to stay best-in-class asset high quality; collections stood at 91 per cent.
NIMs (calculated) have improved by 40bps q-o-q resulting from improve in yield on property which resulted in robust NII progress (up 28 per cent y-o-y). We anticipate price minimize ought to enhance the NIMs going forward. PPoP grew by 36 per cent y-o-y led by decrease working bills (up 9 per cent y-o-y). PAT grew by 16 per cent y-o-y led by greater provisions (up 3x). Thus, RoA remained steady at 2.5 per cent q-o-q. We now have rolled over to FY27 Estimates.
The budgetary allocations in the direction of infrastructure by the federal government ought to help CV cycle. We imagine Sundaram Finance will proceed to learn from the identical. Additional, the diversification in the direction of non-CV in addition to robust performances by its subsidiaries is anticipated to proceed to help premium valuation.
We improve to “Purchase” ranking with revised TP of ₹5,570 (earlier ₹5,160) valuing the mother or father enterprise at 4x FY27E Core ABV.
