SUNDARMFIN - Sundaram Finance

📊 NSE: SUNDARMFIN 🏢 Finance & Investments 📅 Last Updated: 12/14/2025 13:50

💰 Financial Performance

Revenue Growth by Segment

Total Revenue from Operations for H1FY26 reached INR 4,734.57 Cr, a 17.3% increase from INR 4,036.27 Cr in H1FY25. The Asset Financing segment contributed INR 4,378.07 Cr (up 17.8% YoY), while the 'Others' segment contributed INR 357.35 Cr (up 10.8% YoY).

Geographic Revenue Split

Not explicitly disclosed in available documents, though the company operates across India with a focus on rural and urban entrepreneurs in segments like road transport and MSME.

Profitability Margins

Profit After Tax (PAT) for H1FY26 grew 27% to INR 823 Cr compared to INR 648 Cr in H1FY25. Return on Assets (ROA) improved to 2.72% from 2.50% YoY. Return on Equity (ROE) stood at 15.9% for H1FY26 compared to 14.2% in H1FY25.

EBITDA Margin

Profit from operations increased by 16% in H1FY26. The Cost to Income ratio improved significantly to 29.60% in H1FY26 from 31.91% in H1FY25, driven by meticulous management of operating costs and higher dividend income of INR 137 Cr (up 218% YoY).

Capital Expenditure

Not disclosed in available documents as the company is a financial services provider; however, total segment assets for Asset Financing stood at INR 77,204.15 Cr as of September 2025.

Credit Rating & Borrowing

The company maintains a 'AAA' credit rating. Cost of borrowing is managed meticulously to align with this rating, contributing to a 27% growth in PAT through optimized margins.

⚙️ Operational Drivers

Raw Materials

Capital/Debt represents 100% of the primary 'raw material' for lending operations. Total liabilities stood at INR 67,086.69 Cr as of September 30, 2025.

Import Sources

Not applicable for a financial services company; capital is sourced from domestic debt markets, deposits, and institutional borrowings.

Key Suppliers

Not applicable; however, the company relies on a diverse base of depositors (80%+ renewal rate) and institutional investors including SBI AMC, Kotak Group, and ICICI Prudential Life.

Capacity Expansion

Assets Under Management (AUM) stood at INR 55,419 Cr as of September 30, 2025, representing a 15% YoY growth from INR 48,058 Cr. Disbursements for H1FY26 grew 12% to INR 15,423 Cr.

Raw Material Costs

Interest expenses and cost of funds are the primary costs. The company achieved meaningful improvements in yields and tight control on borrowing costs to drive a 27% PAT growth.

Manufacturing Efficiency

Measured by collection efficiency; current demand collection for H1FY26 was 91%. Asset quality remains a focus with Gross Stage 3 assets at 2.03%.

Logistics & Distribution

Distribution is handled through a technology-enabled high-touch model. Distribution services include fixed deposits, mutual funds, and insurance products.

📈 Strategic Growth

Expected Growth Rate

15%

Growth Strategy

Growth will be achieved by extending market share in buoyant segments like Tractors (up 27% YoY) and LCVs (up 20% YoY). The company uses a technology-enabled, data-powered approach to serve underserved MSME and transport entrepreneurs while optimizing margins through prudent asset class and customer segment mix.

Products & Services

Loans for Cars, Commercial Vehicles, Construction Equipment, and Tractors; SME Financing; Leasing; Working Capital Finance (Diesel, Tyre, Insurance); Mutual Funds; Home Loans; and General Insurance.

Brand Portfolio

Sundaram Finance, Sundaram Home Finance, Sundaram Asset Management, Sundaram Alternate Assets, Royal Sundaram General Insurance.

New Products/Services

Sundaram Credit Line and expanded SME/Supply Chain financing are part of the commercial lending portfolio aimed at the aspiring Indian entrepreneur.

Market Expansion

Focus on underserved but aspiring Indian entrepreneurs including road transport operators, small farmers, and MSME owners across India.

Market Share & Ranking

The company held or extended market share across nearly all asset classes in H1FY26 despite a challenging industry environment.

Strategic Alliances

Joint Venture with Royal Sundaram General Insurance Co. Limited; various subsidiaries for Asset Management and Home Finance.

🌍 External Factors

Industry Trends

Industry sales growth has been low single-digit. However, specific segments like LCV (+20%) and Tractors (+27%) are showing strong recovery, while MHICV remains flat. The industry is shifting toward data-powered lending.

Competitive Landscape

Competes with other NBFCs and banks in the vehicle and MSME finance space; maintains competitive edge through the 'Sundaram Experience' and deep customer relationships.

Competitive Moat

The 'Sundaram Way' (Prudence, Integrity, Discipline) and a 70-year legacy create a strong brand moat. This is evidenced by an 80%+ renewal rate on deposits and a consistent 'AAA' rating, providing a sustainable cost-of-funds advantage.

Macro Economic Sensitivity

Highly sensitive to rural sentiment (impacting tractor sales, +27%) and infrastructure activity (impacting MHICV and Construction Equipment).

Consumer Behavior

Shift toward technology-enabled high-touch service and increasing demand for credit among rural entrepreneurs and MSMEs.

Geopolitical Risks

Indirect impact through fuel prices and global supply chain disruptions affecting the automotive industry and transport operator profitability.

⚖️ Regulatory & Governance

Industry Regulations

Compliant with RBI asset classification norms; Gross NPA as per RBI is 2.80% and Net NPA is 1.79% as of September 2025. Fully compliant with SEBI Listing Obligations and Disclosure Requirements (LODR).

Taxation Policy Impact

Not explicitly detailed, but PAT is reported after tax at INR 823 Cr for H1FY26.

Legal Contingencies

The company reported three investor complaints received and resolved during the year; none were pending as of March 31, 2025. No material pending court cases with values were disclosed in the provided text.

⚠️ Risk Analysis

Key Uncertainties

Asset quality deterioration is a key risk, with Net Stage 3 assets rising from 0.89% to 1.13% YoY. Industry-wide low growth in vehicle sales (single digits) poses a volume risk.