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

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

  • MyStocks

MEMBER'S LOGINX

     
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 
*(annualised)   

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

CAMS IPO: Should You Apply? (IPO)

Sep 18, 2020

Does the company having 70% market share of the mutual fund registrar business have sound prospects?

SUNDARAM FINANCE Announces Quarterly Results (3QFY19); Net Profit Up 1.8% (Quarterly Result Update)

Feb 15, 2019 | Updated on Feb 15, 2019

For the quarter ended December 2018, SUNDARAM FINANCE has posted a net profit of Rs 2 bn (up 1.8% YoY). Sales on the other hand came in at Rs 9 bn (up 26.2% YoY). Read on for a complete analysis of SUNDARAM FINANCE's quarterly results.

More Views on News

Most Popular

My Top Stock Recommendation for 2021 and Beyond (Profit Hunter)

Jan 5, 2021

My new guide will show you the huge potential in future proof businesses.

'Essential' Smallcap Stock Recommendations (Profit Hunter)

Jan 8, 2021

The smallcap rally has enough steam left in it. If you haven't joined yet, it is still not too late.

Is Nifty Forming a Top (Fast Profits Daily)

Jan 8, 2021

The charts are telling the bulls to be cautious.

Why Gold Hit Lower Circuit (Fast Profits Daily)

Jan 11, 2021

Were you shocked that bullion prices hit lower circuits on Friday on the MCX? Find out why it happened...

Five Wishes and a Will (The Honest Truth)

Jan 4, 2021

Ajit Dayal on the investing strategy for 2021 and beyond.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

SUNDARAM FINANCE SHARE PRICE


Jan 15, 2021 (Close)

TRACK SUNDARAM FINANCE

  • 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

MORE ON SUNDARAM FINANCE

SUNDARAM FINANCE 8-QTR ANALYSIS

COMPARE SUNDARAM FINANCE WITH

MARKET STATS