Sundaram Finance Q2 Results Review - Earnings Miss Due To Lower Other Income; Asset Quality Stable: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Sundaram Finance Ltd. reported lower than expected operating profit/PAT of Rs 5.4 billion/Rs 3.4 billion (versus estimate of Rs 5.9/3.9 billion) due to lower other income, even as credit cost was steady at 0.7%. Other income came in lower at Rs 2.4 billion versus our estimate of Rs 2.9 billion on account of the lower dividend income. However, net interest income was in-line with expectation at Rs 5.6 billion aided by 20% YoY growth in AUM and largely steady net interest margins QoQ at 4.8% (+7 bps QoQ). AUM growth softens (20% YoY) due contraction in disbursements (-1.2% YoY) due to muted economic activities. Asset quality was stable with gross/ net stage 3 at 1.6%/0.9% (+6 bps / +5 bps QoQ). Credit cost was steady at 0.7% while PCR on stage III assets dropped marginally at 45% versus 46% in Q1 FY25. The recent contraction in commercial vehicle sales at industry level (CV segment forms ~46% of total AUM for Sundaram Finance) can be attributed to factors like heavy rains, general election, flooding in mining areas, decline in government infra spending and heat waves which remains a key cause of concern. We remain watchful of the same. The stock trades at a fair valuation of 3.9x FY26E core book value, with RoA/ RoE at ~2.8%/~19%, respectively. Hence, we maintain our Hold rating on the stock with a revised target price of Rs 4,300 (earlier Rs 4,000)..Click on the attachment to read the full report:.Swiggy IPO: Should You Apply? Read DRChoksey's Analysis.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Sundaram Finance Q2 Results Review - Earnings Miss Due To Lower Other Income; Asset Quality Stable: Systematix

The brokerage maintains 'Hold' rating on the stock with a revised target price of Rs 4,300 (earlier Rs 4,000).

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Sundaram Finance Q2 Results Review - Earnings Miss Due To Lower Other Income; Asset Quality Stable: Systematix

The brokerage maintains 'Hold' rating on the stock with a revised target price of Rs 4,300 (earlier Rs 4,000).

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