Arihant Capital is bullish on Sundaram Finance has recommended buy rating on the stock with a target price of Rs 1482 in its research report dated June 08, 2020.
Arihant Capital 's research report on Sundaram Finance
Sundaram Finance (SUF) reported mixed performance during Q4FY20. Operating performance of the company was in-line with our estimates while profit was impacted due to higher provisioning. NII for the quarter grew by 5% YoY to Rs 426 cr vs. exact match of our NII estimate. Operating profit growth was at 6% YoY to Rs 281 cr vs. our estimate of Rs 222 cr. Profit for the quarter stood at Rs 131 cr was impacted due to higher provisioning at 172% YoY (Arihant Estimate: Rs 196 cr). Net profit figure for Q4FY19 included an exceptional one-time income of Rs 592 cr on account of sale of shares in Royal Sundaram and hence annually PAT numbers are not comparable on a like to like basis. NIM declined by 19bps QoQ to 5.6% due to fall in portfolio yield. Asset quality witnessed an improvement as GNPA/NNPA ratio fell by 32bps/44bps QoQ to 2.47%/1.65% respectively.
Disbursements during the quarter decreased by 27% QoQ due to weak demand in CV cycle and slowdown in consumption space. We maintain our ‘Buy’ rating on the stock with a revised TP of Rs 1,482 (earlier Rs 1,541).
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