SUNDARMFIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.8

📊 Core Financials Overview

Profitability

ROE of 14.7% and ROCE of 9.71% indicate solid but not exceptional capital efficiency.

EPS of ₹150 supports a P/E of 30.6, which is above the industry average of 24.0—suggesting a premium valuation.

PAT declined from ₹546 Cr to ₹429 Cr QoQ, though YoY growth remains strong with a 39.4% variation.

Balance Sheet Health

Debt-to-equity ratio of 4.25 is high, typical for NBFCs, but worth monitoring for interest coverage and asset quality.

Book Value of ₹1,003 vs Current Price ₹4,587 → P/B ratio ~4.57, which is elevated for a financial stock.

Dividend Yield of 0.76% adds modest income appeal.

Cash Flow & Stability

PEG ratio of 1.60 suggests mild overvaluation relative to growth.

RSI at 48.2 and MACD negative indicate neutral-to-weak technical momentum, with potential for further consolidation.

📉 Valuation Metrics

Metric Value Insight

P/E Ratio 30.6 Slightly overvalued vs industry PE

P/B Ratio ~4.57 Premium pricing

PEG Ratio 1.60 Fair-to-stretched valuation

Intrinsic Value ~₹4,200–₹4,400 Slightly below current price

Sundaram Finance appears mildly overvalued, but its fundamentals justify a long-term premium.

🏦 Business Model & Competitive Edge

Sector: Sundaram Finance Ltd is a leading NBFC focused on commercial vehicle financing, retail loans, and insurance distribution.

Strengths

Strong brand in South India with deep customer relationships

Conservative underwriting and asset quality management

Diversified income streams including insurance and asset management

Challenges

High leverage and declining quarterly profits

Slight drop in FII holding (−0.19%) may reflect cautious sentiment

According to TopStockResearch’s analysis, the company has struggled to generate sufficient free cash flow to support its business, despite strong profitability metrics

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📌 Entry Zone Recommendation

Suggested Entry Range: ₹4,200–₹4,400

Below 50 DMA (₹4,716) and 200 DMA (₹4,741)

RSI and MACD suggest waiting for technical confirmation before entry

🧭 Long-Term Holding Guidance

Hold if Already Invested: Strong fundamentals and brand equity support long-term compounding.

Accumulate on Dips: Especially near ₹4,200 for better margin of safety.

Watchlist Triggers

EPS growth and margin expansion

Asset quality metrics and provisioning trends

Institutional accumulation

Sundaram Finance is a well-managed NBFC with a conservative approach and regional dominance. While valuation is slightly stretched, its fundamentals make it a worthy long-term candidate. You can explore more on Trendlyne’s stock report for deeper insights

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