Goal: ₹5,570
CMP: ₹4,652.95
Sundaram Finance reported sturdy AUM progress at 19 per cent y-o-y vs 20 per cent y-o-y (Q2-FY25) led by sturdy 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 as a result of enhance in yield on property which resulted in sturdy NII progress (up 28 per cent y-o-y). We anticipate fee 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 secure at 2.5 per cent q-o-q. We’ve rolled over to FY27 Estimates.
The budgetary allocations in the direction of infrastructure by the federal government ought to assist 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 sturdy performances by its subsidiaries is anticipated to proceed to assist premium valuation.
We improve to “Purchase” score with revised TP of ₹5,570 (earlier ₹5,160) valuing the father or mother enterprise at 4x FY27E Core ABV.
