Buy Sundaram Finance, target price Rs 2890: ICICI Direct

ICICI Direct has buy call on Sundaram Finance with a target price of Rs 2890. The current market price of Sundaram Finance is Rs 2371.85.

Sundaram Finance, incorporated in the year 1954, is a Large Cap company (having a market cap of Rs 26441.05 Crore) operating in NBFC sector.

Sundaram Finance key Products/Revenue Segments include Interest, Fees & Commission Income, Dividend, Income From Sale Of Share & Securities, Lease Rentals, Other Services and Bad Debts Recovery for the year ending 31-Mar-2022.


Financials
For the quarter ended 30-09-2022, the company has reported a Consolidated Total Income of Rs 1339.61 Crore, up 6.94 % from last quarter Total Income of Rs 1252.67 Crore and up 3.13 % from last year same quarter Total Income of Rs 1298.99 Crore. Company has reported net profit after tax of Rs 280.97 Crore in latest quarter.

The company’s top management includes Mr.S Viji, Mr.T T Srinivasaraghavan, Mr.L Ganesh, Mr.R Raghuttama Rao, Ms.Shobhana Ramachandhran, Mr.S Prasad, Mr.S Mahalingam, Mr.S Ram, Mr.A N Raju, Mr.Rajiv C Lochan, Mr.Harsha Viji, Mr.P N Venkatachalam. Company has B K Khare & Co. as its auditors. As on 30-09-2022, the company has a total of 11 Crore shares outstanding.

Investment Rationale
Improving industry outlook coupled with focus on gaining market share to aid business growth. Further, expanding geographic footprint in non-southern regions and growing new areas of focus – lending to MSMEs, small NBFCs and leasing business will propel disbursements ahead. Margins could remain volatile in near term. However, improvement in operating leverage and lower credit cost is seen aiding RoA ahead of 2.5% in FY23-24E. Sustained business growth in subsidiaries to further aid valuations. Thus, the brokerage remains positive on the counter.

Promoter/FII Holdings
Promoters held 38.49 per cent stake in the company as of 30-Sep-2022, while FIIs owned 7.83 per cent, DIIs 16.7 per cent.