Sundaram Finance (SFL) is a Chennai-based NBFC with a presence in auto financing, home finance, asset management and general insurance business. Major value is derived from asset financing (vehicle financing) with AUM of Rs. 31226 crore as of December 2020. The company has 583 branches with a substantial presence (~55%) in southern India.
Valuation & Outlook
Consistent business growth, focus on asset quality and strong & conservative management has led SFL to command premium valuation compared to its peers. Going ahead, infrastructure push by government and scrappage policy could act as a catalyst to bolster business growth as well as earnings trajectory. Performance of subsidiaries is decent but unlocking value will take time. We expect healthy earning trajectory at 15-16% in FY21-23E and RoA to remain at 2.2-2.3%. Valuing the stock on an SOTP basis, we arrive at a target price of Rs. 2450 (Rs. 1920 earlier) but due to recent run-up in stock price, we downgrade our recommendation from BUY to HOLD.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_SundaramFin_CoUpdate_Feb21.pdf
Shares of SUNDARAM FINANCE LTD. was last trading in BSE at Rs.2495.3 as compared to the previous close of Rs. 2414.1. The total number of shares traded during the day was 6372 in over 881 trades.
The stock hit an intraday high of Rs. 2510 and intraday low of 2393.2. The net turnover during the day was Rs. 15722483.