📌 At a Glance
Sundaram Finance Ltd (CMP ₹5,359.00) closed FY25 with a 17% rise in AUM to ₹51,476 Cr and 6% PAT growth to ₹1,543 Cr. Disbursements grew a modest 9%, net NPA remained below 1%, and the board declared a ₹21 per share dividend (210%). All sounds steady — but here’s the catch: ROA dropped to 2.85% from 3.18%, and NIMs are clearly under pressure. So is this a safe compounding king… or is it cruising on cruise control while peers rev hard?
🏢 About the Company
| Metric | Value |
|---|---|
| Name | Sundaram Finance Ltd (SFL) |
| CMP (May 26, 2025) | ₹5,359.00 |
| 52W High/Low | ₹5,429 / ₹3,260 |
| Market Cap | ₹47,000+ Cr |
| Founded | 1954 |
| Headquarters | Chennai |
| Business | Auto loans, SME loans, Housing Finance, Insurance, Asset Management |
| Group | TSF Group (ex-TVS family) |
A vintage NBFC with a Madras filter coffee balance sheet — conservative, well-run, and allergic to reckless growth.
👥 Key Leadership
- Harsha Viji – Executive Vice Chairman
- Rajiv Lochan – Managing Director
- P.N. Srikant – CCO & Company Secretary
These aren’t fintech bros chasing unicorn status — they’re compounding monks with IRR spreadsheets.
📊 FY25 Standalone Financial Highlights
| Metric | FY25 | FY24 | YoY |
|---|---|---|---|
| AUM | ₹51,476 Cr | ₹43,987 Cr | 🔼 17% |
| Disbursements | ₹28,405 Cr | ₹26,163 Cr | 🔼 9% |
| Net Interest Income | ₹2,793 Cr | ₹2,284 Cr | 🔼 22% |
| Gross Stage 3 (GNPA) | 1.44% | 1.26% | 🔺 18 bps |
| Net Stage 3 (NNPA) | 0.75% | 0.63% | 🔺 12 bps |
| PAT | ₹1,543 Cr | ₹1,456 Cr | 🔼 6% |
| ROA | 2.85% | 3.18% | 🔻 33 bps |
| ROE | 16.30% | 17.51% | 🔻 121 bps |
| CAR | 20.4% | 20.5% | ✅ Stable |
| Final Dividend | ₹21/share | ₹20/share | ✅ 5% higher |
This is a “no nonsense” NBFC — they didn’t chase growth in FY25 because macro headwinds were real: a weak monsoon, cautious rural demand, general elections, and global tariff fears.
📅 Q4FY25 Key Highlights
| Metric | Q4 FY25 | Q4 FY24 | YoY |
|---|---|---|---|
| Disbursements | ₹6,873 Cr | ₹6,209 Cr | 🔼 11% |
| Net NPA | 0.75% | 0.63% | 🔺 Slight uptick |
| Cost-to-Income | 30.8% | 34.68% | 🔽 Efficiency gains |
Management said it plainly: “We focused on market share, not noise.”
🧾 Group-Wide Consolidated Performance
SFL’s real power is in its subsidiaries. And boy, are they pulling weight.
| Segment | FY25 Performance |
|---|---|
| Total Lending + General Insurance AUM | ₹78,145 Cr (🔼 18%) |
| Asset Management AUM | ₹71,826 Cr (🔼 1.3%) |
| Consolidated PAT | ₹1,879 Cr (🔼 31%) |
| Group ROE (est.) | ~17% |
These are clean books with serious annuity income and cross-sell potential.
🧠 EduInvesting Take
“In a world of high-risk fintechs and leveraged NBFCs, Sundaram is the boring compounder your CA told you to marry.”
Sundaram Finance isn’t here to impress you with explosive growth. It’s here to not mess up for 70 years straight.
- ✅ 0.75% Net NPA
- ✅ ₹21 dividend
- ✅ ROA at 2.85% even in a soft year
- ✅ Growing across segments
But the real market worry is the falling ROA + ROE — despite AUM growth.
🧮 Forward-Looking Fair Value Estimate
Let’s estimate FY26 numbers assuming:
- PAT growth: 12% → ₹1,730 Cr
- Shares: ~8.75 Cr
- EPS: ₹197
- Apply P/E: 22x (given its stable compounder status)
👉 Fair Value = ₹197 × 22 = ₹4,334
📍 CMP = ₹5,359
Stock is ~24% above FV — not unjustified, but fully priced unless FY26 delivers a surprise.
✅ Positives
- 🧾 Best-in-class asset quality (Net NPA <1%)
- 💸 Efficient: cost-to-income just 30.8%
- 📈 Asset management + insurance = kicker
- 🧱 Housing finance growing at 30%
- 🧠 Conservative underwriting → No blowups
- 💰 ₹21/share dividend = 0.4% yield (not great, but clean)
⚠️ Risks & Red Flags
- 📉 ROA, ROE trending lower
- 🚫 Growth moderate vs Bajaj Fin, Chola
- 🧮 Yield compression in secured lending
- 🐢 Slow mover compared to new-age NBFCs
- 🌾 Rural recovery not guaranteed even with monsoon optimism
🏃 What to Watch in FY26
- Any spike in NPAs post-election cycle
- Pick-up in SME + used vehicle financing
- Cross-sell ratio from insurance + mutual funds
- Whether PAT can grow >10% to justify CMP
- Consolidation or stake sale in subsidiaries (unlock value)
🧾 Final Word
Sundaram Finance is the Maruti of NBFCs — not flashy, not fast, but utterly dependable.
FY25 wasn’t thrilling. But that’s the point. This is a 70-year-old compounding machine.
📈 If you want drama, look elsewhere.
💰 If you want consistency, stay here.
So the big question is:
Will Sundaram Finance ever trade at fintech-style valuations? Or will it just keep doing ₹1,500 Cr PAT forever in peace and silence?
The answer might be boring — and profitable.
🗓️ Published: May 26, 2025
✍️ By: Prashant Marathe
Tags: Sundaram Finance FY25, NBFC results, AUM growth, net NPA, dividend-paying stocks, TSF Group, ROA decline, NSE SUNDARMFIN, EduInvesting
