Sundaram Finance
Stock Snapshot
Price Performance
Vista Outlook
Basis of our Recommendation
Sundaram Finance's recent performance reflects a strong recovery in the automotive sector, with management reporting a 22% growth in disbursements and a 17% increase in assets under management (AUM). This growth is supported by disciplined credit underwriting and a focus on maintaining a high-quality loan book, evidenced by a reduction in Gross Stage 3 assets to 1.71%. Vista's financial outlook anticipates continued revenue growth, albeit at a moderating pace, with margins expected to remain stable. The company's strategic initiatives, including optimizing its funding mix and enhancing operational efficiency, align with Vista's valuation assessment, which indicates the stock is undervalued with an expected upside of approximately 37.78%. However, potential headwinds such as geopolitical instability, inflationary pressures, and increased competition from traditional banks and fintech could impact future performance. Over the next 12-24 months, key opportunities include leveraging growth in the vehicle finance segment and expanding subsidiary performance, while watchpoints include managing asset quality and navigating rising operational costs
Why We Like This Stock
- Strong growth in disbursements and AUM driven by recovery in the automotive sector
- Management's focus on maintaining high asset quality and optimizing funding mix supports stable margins
- Subsidiary performance is robust, contributing positively to overall business growth
Things To Watch Out For
- Geopolitical uncertainties and inflationary pressures pose risks to credit costs and margins
- Potential deterioration in asset quality could impact profitability if not managed effectively
- Increased competition from banks and fintech may pressure margins and market share
Key Parameters
Financial Snapshot
View Technicals Analysis →| Actuals | Forecast | ||||
|---|---|---|---|---|---|
| FY24 | FY25 | FY26 | FY27 | FY28 | |
| Revenue (Cr.) | 3,856 | 4,287 | 5,064 | 5,443 | 6,093 |
| Profit Before Tax (Cr.) | 2,051 | 2,413 | 2,757 | 3,065 | 3,564 |
| PBT Margin | 53.2% | 56.3% | 54.4% | 56.3% | 58.5% |
| Net Profit (Cr.) | 1,903 | 1,921 | 2,096 | 2,276 | 2,646 |
| Earnings Per Share | 134.8 | 172.9 | 188.7 | 204.8 | 238.2 |
Analyst Recommendations
| Broker | Recommendation | Target Price | Date |
|---|---|---|---|
| IDBI Capital | ► Hold | 5,260 | 04-Aug-2026 |
| Prabhudas Liladhar | ► Accumulate | 5,070 | 04-Aug-2026 |
| HDFC Securities | ► Add | 4,835 | 27-May-2026 |
Company Overview
Show Company Profile
Sundaram Finance Limited, together with its subsidiaries, operates as a non-banking finance company in India. The company accepts fixed, cumulative, and NRI deposits. The company also offers finance for new and used cars, new and used commercial vehicles, and new and used construction equipment; diesel finance for commercial vehicle operators and companies; tire and insurance finance; farm equipment finance for new/used tractors, harvesters, and farm implements; SME finance working capital, enterprise business, and machinery term loans, as well as channel finance; housing finance; and leasing services. In addition, it provides life, health, asset, and business insurance products; mutual funds; and information technology, and business processing and support services. Further, it offers a suite of investment management services, which include asset allocation and execution, portfolio management, tax management, risk management, and estate management. Sundaram Finance Limited was incorporated in 1954 and is based in Chennai, India.