SUNDARMFIN - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.8
| Stock Code | SUNDARMFIN | Market Cap | 55,098 Cr. | Current Price | 4,958 ₹ | High / Low | 5,419 ₹ |
| Stock P/E | 32.1 | Book Value | 1,162 ₹ | Dividend Yield | 0.71 % | ROCE | 9.71 % |
| ROE | 14.7 % | Face Value | 10.0 ₹ | DMA 50 | 5,017 ₹ | DMA 200 | 4,818 ₹ |
| Chg in FII Hold | 0.07 % | Chg in DII Hold | 0.06 % | PAT Qtr | 394 Cr. | PAT Prev Qtr | 429 Cr. |
| RSI | 43.2 | MACD | 26.4 | Volume | 20,614 | Avg Vol 1Wk | 72,851 |
| Low price | 4,200 ₹ | High price | 5,419 ₹ | PEG Ratio | 1.67 | Debt to equity | 4.00 |
| 52w Index | 62.2 % | Qtr Profit Var | 15.9 % | EPS | 155 ₹ | Industry PE | 18.9 |
💰 Financials: Sundaram Finance (SUNDARMFIN) demonstrates moderate efficiency with ROE at 14.7% and ROCE at 9.71%. Quarterly PAT declined from ₹429 Cr. to ₹394 Cr., reflecting short-term pressure, though year-on-year profit variation shows improvement (15.9%). Debt-to-equity ratio of 4.0 is high, typical for NBFCs, but manageable given strong asset quality. Cash flows remain stable, supported by diversified lending operations across retail, commercial, and infrastructure segments.
📊 Valuation: Current P/E of 32.1 is significantly above the industry average of 18.9, suggesting premium valuation. P/B ratio (~4.3) is high relative to book value of ₹1,162. PEG ratio of 1.67 indicates moderate overvaluation compared to growth prospects. Intrinsic value analysis suggests the stock is trading at a premium, requiring caution for new entries.
🏦 Business Model & Competitive Advantage: Sundaram Finance is a leading NBFC with strong presence in vehicle finance, housing finance, and insurance. Its competitive advantage lies in brand trust, diversified lending portfolio, and conservative risk management. The company benefits from India’s growing credit demand, though competition from banks and other NBFCs remains a challenge.
📈 Entry Zone: Considering DMA 50 (₹5,017) and DMA 200 (₹4,818), accumulation is attractive in the ₹4,700–₹4,850 range. Long-term investors can hold for steady compounding returns, supported by strong fundamentals and sector growth.
Positive
- ROE at 14.7% reflects healthy shareholder returns.
- Strong brand presence and diversified lending portfolio.
- Year-on-year profit growth (+15.9%).
- Stable cash flows supported by conservative risk management.
Limitation
- High debt-to-equity ratio (4.0), typical of NBFCs but adds leverage risk.
- P/E of 32.1 is well above industry average (18.9).
- P/B ratio (~4.3) suggests expensive valuation.
- Quarterly PAT decline from ₹429 Cr. to ₹394 Cr.
Company Negative News
- Sequential decline in quarterly profits.
- High leverage compared to peers.
Company Positive News
- Increase in both FII (+0.07%) and DII (+0.06%) holdings.
- Strong year-on-year profit growth supports investor confidence.
Industry
- NBFC industry P/E at 18.9 indicates Sundaram Finance trades at a premium.
- Sector growth driven by rising credit demand in retail and infrastructure.
- Competition from banks and fintech players remains a challenge.
Conclusion
🔑 Sundaram Finance is a fundamentally strong NBFC with diversified operations, strong brand trust, and steady growth. However, high leverage and premium valuation limit near-term attractiveness. Entry around ₹4,700–₹4,850 offers a favorable risk-reward balance. Long-term holding is justified for investors seeking exposure to India’s growing credit demand and stable financial institutions.
I can also prepare a comparative HTML snapshot against peers like Bajaj Finance and Cholamandalam Investment to highlight Sundaram Finance’s relative valuation and efficiency.