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    Buy Sundaram Finance, target price Rs 2630: HDFC Securities

    Synopsis

    Sundaram Finance Ltd., incorporated in the year 1954, is a Large Cap company (having a market cap of Rs 26246.62 Crore) operating in NBFC sector.

    Sundaram-Finance
    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.
    HDFC Securities has buy call on Sundaram Finance Ltd. with a target price of Rs 2630. The current market price of Sundaram Finance Ltd. is Rs 2341.8.

    Sundaram Finance Ltd., incorporated in the year 1954, is a Large Cap company (having a market cap of Rs 26246.62 Crore) operating in NBFC sector.

    Sundaram Finance Ltd. key Products/Revenue Segments include Interest, Fees & Commission Income, Dividend, Income From Sale Of Share & Securities, Lease Rentals, Other Services and Bad Debts Recovery for the year ending 31-Mar-2022.


    Financials
    For the quarter ended 30-09-2022, the company reported a Consolidated Total Income of Rs 1339.61 Crore, up 6.94 % from last quarter Total Income of Rs 1252.67 Crore and up 3.13 % from last year same quarter Total Income of Rs 1298.99 Crore. Company reported net profit after tax of Rs 280.97 Crore in latest quarter.

    Investment Rationale
    SUF’s Q2FY23 earnings were ~15% above our estimates due to lower credit costs (36bps) and strong other income. Business momentum continued to see strong traction, with disbursement growth at +42% YoY (+5% QoQ), driven primarily by CV portfolio (+59% YoY), in line with industry trends. Asset quality remains robust with GS-II/NS-III at 2.5%/1.4% (IRAC GNPA/NNPA at 4.3%/3.0), while the restructured book declined sharply to 2.9% (Q1FY23: 4.1%). Derived spreads contracted by 30bps QoQ and are likely to remain under pressure in a rising interest rate environment. Sustained efforts at portfolio diversification across geographies (non-South at 43.4% of AUM vs. 39.7% in Q2FY22), products (non-CV portfolio at 54% and increasing focus on ICV/SCV segments within CVs) and vintage (used vehicles at 19.2% of disbursals) remain on track in order to augment portfolio growth. The brokerage tweaks FY23/FY24 earnings to factor in higher other income, offset by NIM compression; maintain BUY with a revised SoTP-based target price of INR2,630 (standalone entity at 2.5x Sep-24 ABVPS).

    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.



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    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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