Centrum is bullish on Sundaram Finance has recommended buy rating on the stock with a target price of Rs 2240 in its research report dated June 05,2018.
Centrum's research report on Sundaram Finance
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.
We continue to like SUF for its business model, asset quality and risk-adjusted RoE’s. Valuations at 2.7x FY20E core ABV remain attractive. Retain Buy with SOTP based TP at Rs2,240 (vs. earlier Rs2,030). Key risks: Lower than expected growth, margin pressures or NPA’s risk.
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