Can Sundaram Finance Maintain Its Growth Momentum Amid Rural Revival?
About Sundaram Finance
Centrum Broking has retained a Neutral stance on Sundaram Finance (SUF) with a revised target price of ₹5,113 (CMP ₹4,772.75), up from ₹4,546 earlier. The firm delivered its highest-ever disbursement in Q2FY26, supported by strong rural sentiment and a healthy post-GST consumption recovery.
SUF achieved 18% YoY disbursement growth and 11% QoQ rise, while maintaining asset quality with GNPA/NNPA at 2.80% / 1.79%. Credit costs stood at ₹117 crore, down 26% sequentially. PAT grew 15% YoY to ₹394 crore, driven by higher core income and cost efficiency.
Performance Highlights
- ✅ Strongest disbursement quarter in company history (₹18% YoY growth).
- ✅ PAT ₹394 crore; NIMs improved by 46 bps YoY.
- ⚙️ GNPA/NNPA ratios stable at 2.80% / 1.79% (Q2FY26).
- 📈 Rural consumption recovery supports medium-term AUM expansion.
Centrum projects AUM, PPOP, and PAT CAGR at 15.5%, 16.5%, and 14.3% respectively for FY25–FY28E. ROA/ROE expected to reach 2.7% and 15.3% by FY28.
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Valuation & Risks
- Short-term: Stable margins; valuation upgraded to 4x FY28E ABV.
- Medium-term: Credit costs improving as rural recovery strengthens.
- Long-term: Balanced growth supported by strong governance and low NPAs.
- Risks: Any delay in rural recovery or NIM compression could cap upside.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, observes that Sundaram Finance’s conservative lending and solid asset quality make it a steady compounder for long-term investors. Read more NBFC insights at Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on Sundaram Finance
- How Will Rural Demand Support Sundaram Finance’s FY26 Growth?
- Is Sundaram Finance’s Credit Quality Sustainable Post Q2FY26?
- Can Higher Consumption Post-GST Cuts Drive NBFC Margins?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
