Buy Sundaram Finance, target price Rs 2195: Axis Securities

Axis Securities has buy call on Sundaram Finance with a target price of Rs 2195. The current market price of Sundaram Finance is Rs 1856.35. Time period given by analyst is one year when Sundaram Finance Ltd. price can reach defined target.

Sundaram Finance Ltd., incorporated in the year 1954, is a Large Cap company (having a market cap of Rs 20820.86 Crore) operating in NBFC sector.

Sundaram Finance Ltd. key Products/Revenue Segments include Interest, Fees & Commission Income, Dividend, Lease Rentals, Other Services, Bad Debts Recovery for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 1294.57 Crore, up .37 % from last quarter Total Income of Rs 1289.80 Crore and down -3.26 % from last year same quarter Total Income of Rs 1338.14 Crore. Company reported net profit after tax of Rs 346.26 Crore in latest quarter.

Investment Rationale
SUF has been conservative in building its loan book during uncertain times and the brokerage believes while this approach will help in controlling asset quality stress, overall growth will be calibrated. Despite the ups and downs in the CV cycle, the management’s prudence in lending has led to otherwise consistent performance in the past resulting in strong return ratios (ROA +2.2%). It believes SUF’s well-diversified secured loan mix with strong underwriting practices and comfortable capital position will support operating performance. It upgrades rating from HOLD to BUY with a target price of Rs 2,195/share (based on SOTP valuation), implying an upside of 20% from the CMP.

Promoter/FII Holdings
Promoters held 38.49 per cent stake in the company as of 31-Mar-2022, while FIIs owned 9.91 per cent, DIIs 14.27 per cent.