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 positive aspects 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 because of improve in yield on property which resulted in robust NII progress (up 28 per cent y-o-y). We count on charge lower 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 increased provisions (up 3x). Thus, RoA remained secure at 2.5 per cent q-o-q. We have now rolled over to FY27 Estimates.
The budgetary allocations in the direction of infrastructure by the federal government ought to assist CV cycle. We consider Sundaram Finance will proceed to profit from the identical. Additional, the diversification in the direction of non-CV in addition to robust performances by its subsidiaries is predicted to proceed to assist premium valuation.
We improve to “Purchase” score with revised TP of ₹5,570 (earlier ₹5,160) valuing the mother or father enterprise at 4x FY27E Core ABV.
