Sundaram Finance Ltd. share price target

Sundaram Finance (SUF) clocked in steady AUM growth of ~16/3% YoY/QoQ largely in-line with expectations. Margins were stable despite higher cost of funds being offset by improved yields. Asset quality saw slight deterioration, largely seasonal in nature.

AUM growth was steady at ~16/3% YoY/QoQ largely in-line with expectations, consistent, despite a soft CV cycle. Profitability of Rs 675cr in Q4FY19 included one-time gain of Rs 592cr, resulting from 25.9% stake sell in Royal Sundaram for a consideration of Rs 984cr.

We retain Buy on Sundaram Finance (SUF) and revise our SOTP based TP upwards to Rs2,240. The upward revision to TP follows a) second successive year of 15%+ YoY growth in AuM b) improved profitability (adjusted PAT grew 16% YoY) and c) superior asset quality (GNPA at 1.29%, industry best). Subsidiaries - housing finance, AMC and general insurance remain profitable and contribute meaningful to overall earnings. Commentaries on growth, earnings and asset quality remain encouraging and we have factored the same into our estimates. Valuations...

Sundaram Finance Ltd (SUF), is amongst the oldest vehicle financier, with a track record of strong profitability and growth. In the past couple of years, company has undertaken a conscious strategy of conservatism in tough times, resulting in lower NPA levels vis--vis peers.We initiate SUF with BU..

Set up in 1954, Sundaram Finance Group's services include financing commercial vehicles, passenger cars and construction equipment, as well as specially designed working capital products such as fuel finance and tyre finance. The company is also into home loans, mutual funds, non-life insurance, IT, BPO and distribution of a wide...

The current market price has also been adjusted for demerger on ex-date of February 1, 2018. Accordingly, we have reduced our target price to...

Valuation and view: Q2'18 result beat our estimates on all fronts; we expect momentum therein to continue and have tweaked our estimates to that extent for FY18E/FY19E. In our recent note we had argued for premium valuations for Sundaram Finance, we see that continuing. Retain Buy with SOTP based TP at Rs2,030 (vs. earlier Rs2,000). Value un-locking in the non-financial investments through the demerger process into a separate entity (and subsequently listing of the entity) could add ~10% to our existing SOTP. Key risks: Lower than expected...

Sundaram Finance does not interact with analysts/investors neither discloses any other operating metrics on a quarterly basis. The MHCV industry has now started witnessing deceleration in growth after two strong years. The strong growth in CV industry in the past two years did not translate into growth for Sundaram. Our interaction with other auto NBFC players reveals that large fleet operators who are the prime clients of Sundaram have started...