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IDBI Capital Report
Sundaram Finance Ltd.'s robust assets under management growth sustained at 27% YoY (versus 26% YoY Q3 FY24) led by all time high disbursements (up 25% YoY FY24). Company has gained the market share in all asset classes and geographies of operations which resulted strong growth.
Asset quality has improved further led by improvement in collections; continues to remain best-in-class asset quality. Collections have reverted to preCovid levels to 93%.
Net interest margins have declined due to increase in cost of funds which resulted in lower net interest income growth (up 20% YoY). Adjusted profit after tax grew by 18% YoY led by higher other income. Thus, return on asset improved to 3.2% (FY24) versus 2.8% YoY.
We have revised estimates upwards (up 11% BVFY26E). We downgraded to “Hold” rating with revised target price of 4,940 (earlier 4,400) valuing the parent business at preCovid average 4.3 times FY26E core adjusted book value as stock has run up by 18% post Q3 results.
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