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Sundaram Finance: 1Q profits dip by 15%

Aug 1, 2001

Sundaram Finance (SFL) has posted a 15% fall in earnings for the June quarter. The company's topline too grew by a marginal 5%.

(Rs m)1QFY011QFY02Change
Income from operations 1,119 1,170 4.6%
Other Income 11 18 66.2%
Financial expenses 790 836 5.9%
Operating Profit (EBDIT) 329 334 1.5%
Operating Profit Margin (%)29.4%28.6% 
Operating expenses 124 138 11.3%
Profit before Tax216215-0.8%
Provision & write off3935-11.0%
Tax 70 88 26.8%
Profit after Tax/(Loss) 107 91 -15.0%
Net profit margin (%)9.6%7.8% 
No. of Shares (eoy) (m) 24.0 24.0  
Diluted Earnings per share 17.9 15.2  
P/E (at current price)  5  

SFL's operating margins declined by 90 basis points and other expenses increased by 11%. This contributed to lower profits in the June quarter.

During the quarter, provision figure was lower by 11%. In FY01, SFL has already reduced the ratio of gross non-performing assets to advances to 6.2% (from 7% in FY00). The net NPA ratio at 4% is also one of the lowest in the finance sector. The ratio was just 1% for the retail business.

At the current market price of Rs 73, SFL is trading at a P/E of 5x and Price/Book value ratio of just 0.3x. The company has maintained its dividend ratio to 60% in the past three years. Assuming the company maintains the dividend ratio in the current year too, the dividend yield works out to 8%.

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