Buy Sundaram Finance; target of Rs 2715: HDFC Securities

HDFC Securities is bullish on Sundaram Finance has recommended buy rating on the stock with a target price of Rs 2715 in its research report dated May 26, 2023.

Broker Research

May 30, 2023 / 14:04 IST

Buy

26 Aug, 2025 12:21

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HDFC Securities' research report on Sundaram Finance

SUF’s earnings were ahead of our estimates, driven by higher other income and lower credit costs (20bps), despite prudent provisioning in early-delinquency buckets. Business momentum stayed strong on the back of sustained traction in economic activity and pre-buying (BS VI norms phase II implementation), driving 17% YoY AUM growth. Margins were broadly steady on the back of an optimised liability mix, despite pressure on yields and the rising cost of funds. Asset quality was robust, with GS-III/NS-III at 1.7%/0.9% (IRAC GNPA/NNPA at 3%/2.1%), while the restructured portfolio improved further to 1.8% (FY22: 4.9%). Although the M&HCV segment is expected to witness soft growth in FY24, SUF’s sustained efforts at portfolio diversification across geographies (non-south at 43.5% of AUM vs. 36.7% in Q1FY21), segments (non-M&HCV) and vintage (used vehicles at 22% of disbursals) are likely to cushion portfolio growth.

Outlook

We tweak our FY24/FY25 earnings to factor in better-than-expected AUM growth and lower credit costs and maintain BUY with a revised SoTPbased target price of INR2,715 (standalone entity at 2.6x Mar-25 ABVPS).

For all recommendations report, click here