Sundaram Finance Q4 - Valuations Limit The Upside Considering The Balanced Growth Approach: ICICI Securities

ICICI Securities Report

Sundaram Finance Ltd. reported strong FY23 earnings in key parameters such as standalone assets under management growth (up 17% YoY), home finance AUM growth (up 18% YoY), standalone net interest margins (5.3%) sustenance in rising interest rate regime and better asset quality (gross stage III as on March 2023 stood at 1.66% versus 2.2% in March 2022).

Despite good performance, we continue to believe that possible lower NIM outlook (especially because Sundaram operates in a highly competitive commercial vehicle segment) limits the upside.

Moderation in sequential disbursement and NIMs in Q4 FY23 underline the same. There has been an improvement in management commentary on NIM outlook which was previously for a gradual decline to 4.5% and now is a range bound estimate between 4.5-5%.

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