Sundaram Fin: Looking for growth - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Sundaram Fin: Looking for growth

Aug 23, 2002

Sundaram Finance (SFL) has reported a marginal improvement in financial performance for the quarter ended June 2002. The company's net interest income was flat for the first quarter compared to a 32% dip for the full year ended March 2002. SFL's net profits for the quarter grew by 3% due to lower tax provisions.

(Rs m)1QFY021QFY03Change
Income from Operations 1,170 1,121 -4.2%
Other Income 18 19 5.0%
Interest & depreciation 836 789 -5.6%
Net interest income 334 332 -0.7%
Other Expenses 138 143 3.6%
Operating Profit 197 189 -3.8%
Operating Profit Margin (%)16.8%16.9% 
Provisions and Contingencies 35 6996.4%
Profit before Tax 180 139 -22.4%
Tax 88 46-48.2%
Profit after Tax/(Loss) 91 94 2.6%
Net Profit Margin (%)7.8%8.4% 
No. of Shares (m) 24.0 24.0  
Diluted Earnings per share*15.215.6 
P/E Ratio 7.4 

Despite the difficult economic conditions and competitive retail finance market, SFL achieved a growth of 18% in hire purchase and loan disbursements in FY02. Gross disbursements of the company recorded a CAGR of 20% over the last three years. With lower interest rates, the company could achieve better growth rates in the current year for its loan disbursements. In the retail finance market, SFL focuses on vehicle financing, deposit acceptance and distribution of various financial products. Its subsidiaries and associate companies on the other hand, offer a range of financial products including mutual funds, home loans and insurance products.

During the quarter, the company's cost to income ratio increased marginally to 41% from 39% in 1QFY02. It has maintained its operating margins as 17% due to a significant reduction in depreciation charge (lower by 9%). Non-performing assets provisions meanwhile soared by 96%, which resulted in a 22% drop in pre tax profits.

At the current market price of Rs 116, Sundaram Finance is trading at a P/E of 7x and price to book value ratio of 0.6x. The company has traded in the average price to book value ratio of 1-1.5x in the last three years. Aggressive entry of banks into retail financing, is pressurizing the company's business. Although, SFL has expertise in hire purchase financing, its higher cost of funds compared to banks is trimming its earnings growth.

Equitymaster requests your view! Post a comment on "Sundaram Fin: Looking for growth". Click here!


More Views on News

The Affordable Housing Boom Could Boost these 5 Stocks for Years to Come... (Views On News)

Oct 20, 2021

With record low interest rates and numerous discounts and schemes by real estate companies, the affordable housing boom is here to stay.

6 Debt Free Penny Stocks with Solid Growth (Views On News)

Oct 2, 2021

Penny stocks which have a decent balance sheet, low or zero debt and a track record for paying consistent dividend fare much better against their peers.

3 Stocks Riding the Fintech Megatrend in India (Views On News)

Sep 29, 2021

India's fintech industry, valued at US$31 bn, is projected to grow to US$84 bn by 2025.

HDFC Shares Rise as Loan Disbursements Jump 181% (Views On News)

Aug 2, 2021

The company witnessed a growth in both the affordable housing and premium segment as lockdown restrictions eased.

Bajaj Finance Stock Springs a Surprise. Gains 5% Despite Disappointing Results (Views On News)

Jul 22, 2021

Bajaj Finance's Q1 performance was muted because of lockdowns but the company has made higher provisions.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 2, 2021 01:23 PM


  • Track your investment in SUNDARAM FINANCE with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks