01 — At a Glance
The Boring Finance Company That Prints Money Like It’s Going Out of Style
- 52-Week High / Low₹5,642 / ₹4,200
- 9MFY26 Revenue (9 Months)₹5,373 Cr
- 9MFY26 PAT (9 Months)₹1,226 Cr
- TTM EPS₹185.21
- TTM P/E28.9x
- Book Value₹1,362
- Price to Book3.93x
- Dividend Yield0.65%
- Debt / Equity4.35x
- Interest Coverage1.59x
The Setup: Sundaram Finance closed 9MFY26 with ₹5,373 crore revenue (+14.8% YoY), ₹1,226 crore PAT (+23% YoY), and AUM growth at 16% YoY to ₹58,236 crore. Gross Stage 3 assets at 1.91%—industry best. Cost-to-income improved to 28.72% from 31.37%. The company just declared 160% interim dividend (₹16/share). And yet the stock hasn’t moved proportionally to earnings. This is the quiet story of an NBFC that’s compounding at mid-teens growth rates while everyone obsesses over fintech and AI. Welcome to Sundaram Finance: seven decades of discipline, zero PR stunts.
02 — Introduction
The Finance Company No One Talks About (And That’s Fine By Them)
Sundaram Finance has existed since 1954. That’s 72 years of financing vehicles and dreams. No blockchain pivots. No “strategic repositioning” every quarter. No guidance misses followed by apology calls. Just steady, methodical cash generation across a disciplined product range: commercial vehicles (24% of AUM), cars (25%), construction equipment (11%), tractors (7%), home loans (33%), SME credit, leasing, and increasingly, asset management and insurance distribution.
The company operates through 748 branches across four regions (South 50%, North 26%, West 11%, East 7%), reaching 646,779 customers directly in retail finance and 57.85 lakh customers across the entire group (including insurance and asset management). Think of it as a hyperlocal lender with distribution depth in semi-urban India that most large banks still haven’t figured out.
Nine months into FY26, they’ve grown AUM 16% to ₹58,236 crore, expanded disbursements 13% to ₹24,270 crore, and posted 23% PAT growth to ₹1,226 crore. The cost-to-income ratio—a measure of operational efficiency—improved 265 basis points to 28.72%. Meanwhile, asset quality remains pristine: Gross Stage 3 at 1.91%, net NPA at 1.73% (vs. 2.46% and 1.62% a year ago). Collections running at 91% for current demand. This isn’t hype. This is execution in a rising rate environment.
New leadership took charge in FY26. Rajiv C. Lochan, formerly of McKinsey and The Hindu Group (IIT Madras, MIT, Columbia credentials), stepped in as Managing Director. Early signals: focus on cost efficiency, selective market expansion, and maintaining the credit discipline that has kept this institution’s stage 3 assets below 2% even through cycles. No strategic pivots. Just sharper operational execution.
The Real Story: A mid-sized NBFC generating 15%+ ROE while maintaining best-in-class asset quality, expanding 16% YoY, and returning cash to shareholders at 160% dividend payout—all while trading at P/E 28.9x. Most investors are hunting for 50x revenue SaaS companies. Sundaram is quietly becoming a ₹60,000 crore market cap institution.
03 — Business Model: WTF Do They Even Do?
They Lend Money. Across Multiple Products. And They’re Scary Good At It.
Sundaram Finance originates loans. That’s it. No asset management (they acquired Principal AMC, but that’s a separate story). No insurance (50-50 JV in Royal Sundaram, but that’s a joint venture). The core business is simple: take deposits and wholesale funding, lend it against vehicles, equipment, homes, and SME assets, and collect repayments at spreads that generate 9.64% ROCE and 15.3% ROE.
The portfolio breaks into clear segments. Commercial vehicles (₹13,975 crore or 24% of AUM as of Dec 2025) funds tractors, MHCV, ICV, LCV, and retail CV. Cars (₹14,563 crore or 25%) finances new and used passenger vehicles. Construction equipment (₹6,233 crore or 11%) covers cranes, excavators, bulldozers. Tractors (₹4,071 crore or 7%) finances agriculture equipment. Commercial lending and others (₹7,997 crore or 13.7%) includes SME credit, leasing, and specialty finance. The company also owns a home finance subsidiary (₹19,230 crore AUM) with 181 branches and 67,988 customers.
What makes them different? Distribution depth in semi-urban and rural India. A branch footprint that reaches geographies where large banks fear to tread. Underwriting discipline honed through cycles—they’ve lived through two credit events and emerged with stage 3 assets under 2%. Technology-enabled collections (91% current collection efficiency). And a funding model that leverages AAA ratings (from both ICRA and CRISIL) to access low-cost deposits and wholesale funding at competitive rates.
Commercial Vehicles₹13,975 Cr24% of AUM
Cars₹14,563 Cr25% of AUM
Construction Eq.₹6,233 Cr11% of AUM
Tractors & Others₹21,068 Cr36% of AUM
The Funding Mix: As of December 2025, Sundaram funds itself through a diversified base: 34.4% debentures, 34.2% bank borrowings, 12.3% deposits, 11.2% securitisation, 7.9% commercial paper. The company maintains AAA ratings from both ICRA and CRISIL on deposits and debentures, providing consistent access to low-cost funding. This is not commodity finance. This is a pristinely-rated institution in an NBFC space where credit surprises are common.
💬 How many years has an NBFC maintained stage 3 assets below 2% while growing 16%? Comment if you’ve seen another one.
04 — Financials Overview
9M FY26: The Numbers That Should Matter
Result type: Quarterly Results (9-Month Period) | 9MFY26 Revenue: ₹5,373 Cr | 9MFY26 PAT: ₹1,226 Cr | TTM EPS: ₹185.21 | P/E: 28.9x
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue from Operations | 1,876 | 1,616 | 1,768 | +16.1% | +6.1% |
| Finance Cost | 940 | 835 | 901 | +12.6% | +4.3% |
| Operating Profit | 592 | 467 | 515 | +26.8% | +15.0% |
| PAT | 403 | 349 | 394 | +15.5% | +2.3% |
| EPS (₹) | 36.30 | 31.40 | 35.50 | +15.6% | +2.3% |
What’s Happening: Revenue grew 16.1% YoY in Q3 FY26, driven by 16% AUM growth and stable-to-improving yields. Finance costs rose 12.6%, slower than revenue growth—net interest margin holding steady. Operating expenses (cost-to-income) came in at 14% of revenue, a dramatic improvement from 15% a year ago. This is operational leverage in action. Even loan loss provisions (impairment) at ₹102 crore are measured, suggesting conservative underwriting despite macro headwinds. PAT at 403 crore in Q3 annualises to ₹1,612 crore, roughly in line with FY25 full-year PAT of ₹1,543 crore plus growth momentum. The stock trades at 28.9x TTM P/E. Peer median NBFC P/E sits around 17.7x. Sundaram trades at a ~63% premium. Is it justified? See the valuation section.
05 — Valuation: Fair Value Range
What’s This Company Actually Worth?
Join 10,000+ investors who read this every week.
