Check Before You Invest : Sundaram Finance Ltd

BSE: 590071 NSE: SUNDARMFIN ISIN: INE660A01013

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does Sundaram Finance Ltd belong to?

Sundaram Finance Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q.2 Is Sundaram Finance Ltd a good quality company?

Sundaram Finance Ltd is a average quality company, based on a somewhat consistent 10-year financial track record.

Q.3 Is Sundaram Finance Ltd undervalued or overvalued?

Sundaram Finance Ltd appears Fair, as its key valuation ratios are in line with their past averages.

Q.4 Is Sundaram Finance Ltd a good buy now?

Sundaram Finance Ltd is not a good buy now, based on weak price trend analysis suggesting prices may fall. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of Sundaram Finance Ltd?

Sundaram Finance Ltd Operating Income growth is 16.77% for FY-2025, which is above its 5-year CAGR of 12.51%, indicating faster growth.

Q.2 Return on Assets of Sundaram Finance Ltd?

Sundaram Finance Ltd Return on Asset is 2.6%, which is above its 5-year historical median of 2.4%, indicating improved earnings on assets.

	Current Level	5-year Historic Median
NPM%	21.36	20.88
PPOP%	22.5	17.61
RoA%	2.6	2.4

Q.3 Return on Equity (ROE) of Sundaram Finance Ltd?

Sundaram Finance Ltd Return on Equity is 15% for FY-2025, which is above its 5-year historical median of 13.7%, indicating the business is making better use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Sundaram Finance Ltd?

Sundaram Finance Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 22.5% for FY-2025, which is above its 5-year median(17.61%), indicating increasing margins.

Q.5 Net Profit Margin of Sundaram Finance Ltd?

Sundaram Finance Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 21.36% for FY-2025, which is above its 5-year median( 20.88%), indicating increasing margins.

Q.6 Total Asset growth of Sundaram Finance Ltd?

Sundaram Finance Ltd Total Asset growth is 17.29% for FY-2025, which is above its 5-year CAGR of 11.04%, indicating faster growth.

Q.7 Capital Adequacy ratio of Sundaram Finance Ltd?

Sundaram Finance Ltd Capital Adequacy ratio (CAR) is 20.42% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Sundaram Finance Ltd?

Promoters hold 37.21% of the Sundaram Finance Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of Sundaram Finance Ltd vs Industry Peers?

Sundaram Finance Ltd AUM CAGR is 11.04%, compared to the 5-year industry median CAGR of 15.99%, indicating slower growth and losing its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Sundaram Finance Ltd vs industry peers

Sundaram Finance Ltd profit metrics are above the industry median level of 9.53%, indicating stronger profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM%	21.36	13.77
PPOP%	22.5	12.76
RoA%	2.6	2.05

Q.3 Operating efficiency of Sundaram Finance Ltd vs industry peers?

Sundaram Finance Ltd ROCE (9.3) is above the industry median of (9.05); while the current ROE (13.7) are above than the 5-year average Industry ROE (12.85). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM%	21.36	13.77
PPOP%	22.5	12.76
RoA%	2.6	2.05
ROCE%	9.7	9.05
ROE%	15	12.85

Valuation & price assessment

Q.1 Stock return of Sundaram Finance Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 13.4% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	13.4%	12.9%	24.8%	-12.6%

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	24.52	24.71	28.96
Price to Book	3.22	3.70	1.11
Price to Sales	5.83	6.53	9.10
EV to EBITDA	10.07	12.97	11.77

Q.4 Valuation ratios of Sundaram Finance Ltdvs historical and industry averages?

The current Price to book ratio (P/B) 3.22% is lower than its historical median of 3.70%, indicating that at the current price the stock is undervalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

Sundaram Finance Ltd return on invested capital (ROIC) is 6.93% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

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