Prabhudas Lilladher's research report on Sundaram Finance
FY25 has seen soft disbursement growth (+9% YoY) due to low government spending/ general slowdown in economic activity. We build a growth of ~16% in FY26, anticipating a pick-up in economic activity in H2. Calculated NIM stood largely stable at 5.26%; we expect a similar trend in FY26 sided by a lower CoF. Asset quality trends have improved in the quarter with healthy collection activity.
Outlook
We value SUF’s standalone business at Rs 4,145 (3.2x Mar27 ABV) and assign a value of Rs 1,069 to subsidiaries with a 20% holding company discount to arrive at a TP of Rs 5,000. Our valuation indicates a discount over 5-year Average P/ABV of 3.6x due to weaker outlook on growth. We assume coverage with a HOLD rating as the stock price captures all the positives.
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