Sundaram Finance’s target price is set at ₹5,570, with the current market price at ₹4,652.95. The company reported a strong growth in Assets Under Management (AUM) at 19% year-on-year, driven by robust disbursements growth. Disbursements increased by 19% due to market share gains across assets, while maintaining best-in-class asset quality with collections at 91%.
Net Interest Margins (NIMs) improved by 40 basis points quarter-on-quarter, supported by a higher yield on assets leading to a 28% year-on-year growth in Net Interest Income (NII). The company’s Profit before Provision (PPoP) grew by 36% year-on-year, attributed to lower operating expenses, while Profit After Tax (PAT) increased by 16% year-on-year, with provisions tripling. Return on Assets (RoA) remained stable at 2.5% quarter-on-quarter.
The government’s budgetary allocations towards infrastructure are expected to support the Commercial Vehicle (CV) cycle, benefitting Sundaram Finance. Additionally, diversification towards non-CV segments and strong performance by subsidiaries are projected to maintain premium valuations. The recommendation for the stock is upgraded to a “Buy” with a revised target price of ₹5,570, valuing the parent business at 4 times the FY27E Core Adjusted Book Value (ABV).
