Sundaram Finance Ltd (Rs 302)
(BSE Code- 590071, NSE Code- SUNDARMFIN)
(P/E- 10, Equity - Rs55.55 cr, Market Cap - Rs1,665 cr)
Sundaram Finance Ltd (SFL) was established in 1954 by Mr TS Santhanam. SFL, based at Chennai, has 10 subsidiaries including SBNP Home Finance and SBNP Paribas AMC. SFL is involved in the following operations: Investments - Deposits, Mutual funds, Retail Finance - Car finance, Retail finance, Business finance - Commercial vehicle, Equipment finance, Tyre finance, Fleet card and Services - Infotech solutions, BPO, Logistics services, Insurance. Following the opening up of the insurance sector, SFL formed a joint venture company with Royal & Sun Alliance Insurance Plc (now a subsidiary) named Royal Sundaram Alliance Insurance Company (RSAIC) for non-life insurance business. It commenced operation in March 2001 and offers a full range of insurance products including fire, motor, personal accident, home, health, travel and rural insurance. In FY06, SFL sold 49.90% of its stake in Sundaram AMC to BNP Paribas. SFL's 2 JVs - Royal Sundaram Alliance Insurance Company Ltd and BNP Paribas Sundaram Global Securities Operations Pvt Ltd - are doing extremely well as reflected in SFL's FY09 annual report
From FY06 to FY09, Total Income has increased by a CAGR of 23.22%, but PAT has decreased at a marginal rate of 4.04% respectively. This decrease in PAT as well as the issue of bonus shares makes the ROE appear unimpressive. For FY09, SFL posted net profit of Rs 167.88 cr. on total income of Rs 1,742 cr. on consolidated basis. On a equity of 55.55 cr.(after 1:1 bonus issue in Aug'08) (Promoters' stake- 41.15%), the EPS stood at Rs 30.24 and the dividend declared was 65%. SFL posted net profit of Rs 150.73 cr. on total income of Rs 1,082 cr on standalone basis. SBNP Paribas Home Finance has a lion's share in consolidated sales as well as consolidated PAT. Going forward, SFL has ventured into the financing of cars and multi-utility vehicles, which is a growing market. An increase in freight movement would revive both new and used commercial vehicles sales, triggering the need of their financing. Foreseeing the slump in commercial vehicles sales in FY09, SFL reduced its exposure on commercial vehicles which highlights the foresight of the management. For the Q1 ended June 2009, SFL has posted net profit of Rs 61.23 cr. on total income of Rs 271.1 cr. on standalone basis. The net profit for Q1 is higher due to exceptional item which represents sale of 10,17,998 Equity shares of face value Rs 5/- each in WABCO - TVS India Ltd.
SFL has got one of cleanest and high quality asset books as Gross and net NPAs are only 1.64% and 0.75% of the total assets. Its philosophy of building sustainable, long-term relationships ensures that growth is not achieved at the cost of quality. As high as 89% of the total assets are net current assets, indicating a strong balance sheet. Only 6.89% of the total assets are held up as investments. Further, only 50.62% of these investments are into equities indicating neglibible exposure to market risk. At the current price of Rs 302, the stock trades at about 10 times FY09 earnings and about 1.4 times Book Value (Rs 207.5). Accumulate on declines for good gains over the medium-long term.
Source: Internet (By Sanjay Chabria)
(BSE Code- 590071, NSE Code- SUNDARMFIN)
(P/E- 10, Equity - Rs55.55 cr, Market Cap - Rs1,665 cr)
Sundaram Finance Ltd (SFL) was established in 1954 by Mr TS Santhanam. SFL, based at Chennai, has 10 subsidiaries including SBNP Home Finance and SBNP Paribas AMC. SFL is involved in the following operations: Investments - Deposits, Mutual funds, Retail Finance - Car finance, Retail finance, Business finance - Commercial vehicle, Equipment finance, Tyre finance, Fleet card and Services - Infotech solutions, BPO, Logistics services, Insurance. Following the opening up of the insurance sector, SFL formed a joint venture company with Royal & Sun Alliance Insurance Plc (now a subsidiary) named Royal Sundaram Alliance Insurance Company (RSAIC) for non-life insurance business. It commenced operation in March 2001 and offers a full range of insurance products including fire, motor, personal accident, home, health, travel and rural insurance. In FY06, SFL sold 49.90% of its stake in Sundaram AMC to BNP Paribas. SFL's 2 JVs - Royal Sundaram Alliance Insurance Company Ltd and BNP Paribas Sundaram Global Securities Operations Pvt Ltd - are doing extremely well as reflected in SFL's FY09 annual report
From FY06 to FY09, Total Income has increased by a CAGR of 23.22%, but PAT has decreased at a marginal rate of 4.04% respectively. This decrease in PAT as well as the issue of bonus shares makes the ROE appear unimpressive. For FY09, SFL posted net profit of Rs 167.88 cr. on total income of Rs 1,742 cr. on consolidated basis. On a equity of 55.55 cr.(after 1:1 bonus issue in Aug'08) (Promoters' stake- 41.15%), the EPS stood at Rs 30.24 and the dividend declared was 65%. SFL posted net profit of Rs 150.73 cr. on total income of Rs 1,082 cr on standalone basis. SBNP Paribas Home Finance has a lion's share in consolidated sales as well as consolidated PAT. Going forward, SFL has ventured into the financing of cars and multi-utility vehicles, which is a growing market. An increase in freight movement would revive both new and used commercial vehicles sales, triggering the need of their financing. Foreseeing the slump in commercial vehicles sales in FY09, SFL reduced its exposure on commercial vehicles which highlights the foresight of the management. For the Q1 ended June 2009, SFL has posted net profit of Rs 61.23 cr. on total income of Rs 271.1 cr. on standalone basis. The net profit for Q1 is higher due to exceptional item which represents sale of 10,17,998 Equity shares of face value Rs 5/- each in WABCO - TVS India Ltd.
SFL has got one of cleanest and high quality asset books as Gross and net NPAs are only 1.64% and 0.75% of the total assets. Its philosophy of building sustainable, long-term relationships ensures that growth is not achieved at the cost of quality. As high as 89% of the total assets are net current assets, indicating a strong balance sheet. Only 6.89% of the total assets are held up as investments. Further, only 50.62% of these investments are into equities indicating neglibible exposure to market risk. At the current price of Rs 302, the stock trades at about 10 times FY09 earnings and about 1.4 times Book Value (Rs 207.5). Accumulate on declines for good gains over the medium-long term.
Source: Internet (By Sanjay Chabria)
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