Sundaram Finance Limited

Financial Services — Credit Services · NSE

₹4,247.00+₹35.70 (+0.85%)

DalalBaazaar Score

82 / 100

🟢 Strong

Verdict

ATTRACTIVE

Risk

Low

Driven by negative free cash flow.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Sundaram Finance Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sundaram Finance Limited, together with its subsidiaries, operates as a non-banking finance company in India. The company accepts fixed, cumulative, and NRI deposits.

IndustryCredit Services

SectorFinancial Services

Employees5,344

Annual revenue₹4,922 Cr

How does it make money?

Turns over ₹4,922 Cr a year. Of every ₹100 of sales, about ₹42 reaches shareholders as profit. Each of its 5,344 employees supports ₹92.1 lakh of revenue a year, the signature of a people-led business.

Net margin41.8%

Revenue / employee₹92.1 lakh

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

BAJAJ FINANCE LIMITEDP/E 30.2x · ROE 17.8%

STATE BANK OF INDIAP/E 10.3x · ROE 15.2%

HDFC BANK LTDP/E 15.9x · ROE 13.8%

ICICI BANK LTD.P/E 18.1x · ROE 16.5%

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

ROE13.8%

Peer median ROE16.5%

What is the outlook?

5 analysts covering the stock expect revenue to grow about 16.3% and earnings to grow about 15.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+16.3%

Est. earnings growth+15.4%

Analysts5

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +67% while net margin moved -7% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+67%

Margin effect-7%

DalalBaazaar Score

82/ 100

Strong

Weighted across six categories. Every point is explained below.

✓ Beta of 0.17 — historically steadier than the index
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

86/ 100

Excellent

How good the business is, ignoring the share price entirely.

Valuation

59/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

21.2x

3Y Median

31.0x

40 monthly readings · mean 31.1x · range 21.5x–40.5x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 31% below its 3y median of 31.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 25% above the peer median of 17.0x.

vs. its own history

Cheap

31.0x median over 40 months · -31%

vs. sector peers

Expensive

17.0x median of 4 peers · +25%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

21.2x

P/B

3.17x

EV/EBITDA

—

PEG

1.35

Dividend Yield

0.94%

What's Good / What's Bad

🟢 What's Going Well2

Valuation below its historical average
At 21.2x the stock trades 31% below its own median of 31.0x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 watch

🟡Low reported insider holdingOwnership
Reported insider holding is 0.0%. For Indian companies this field is an unreliable proxy — check the official promoter shareholding in the exchange filing.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 31% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 25% above the peer median. That premium needs a reason that persists, or it closes.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 14% a year✓ 18.6% CAGR
Latest reported year was 26.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2Return on equity stays above 12%✓ 13.8%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Valuation vs its own median of 31.0x✓ 21.2x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

6 / 10 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 6 neutral · 2 weak

Market Cap

₹46,809 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

21.2x

Fair

Fairly valued against the generic band

P/B Ratio

3.17x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹200.18

Profitable

Profitable on a per-share basis

ROE

13.8%

Moderate

Moderate capital efficiency

ROCE

Not meaningful

N/A for lenders

Banks and NBFCs don't report capital employed the way other businesses do

Debt/Equity

4.09x

High

High leverage

Revenue Growth (YoY)

26.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

33.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.94%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹5,955 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹4,247

P/E (Forward)

19.2x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

60.6%

Good

Healthy core-business profitability

Net Margin

46.1%

Good

Strong bottom-line conversion

Beta (vs Nifty)

0.17

Defensive

Steadier than the market

52W Range Position

15%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

4385.4 / 4507.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

34.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,953 Cr	₹3,628 Cr	₹4,214 Cr	₹4,922 Cr	+18.6%
PAT (Net Profit)	₹1,328 Cr	₹1,436 Cr	₹1,879 Cr	₹2,059 Cr	+15.7%
EPS	₹120.49	₹130.31	₹170.53	₹186.81	+15.7%
ROE	13.4%	13.0%	14.2%	13.8%	—
Total Debt	₹35,986 Cr	₹44,460 Cr	₹52,538 Cr	₹60,918 Cr	+19.2%
Free Cash Flow	-₹6,530 Cr	-₹8,571 Cr	-₹9,043 Cr	-₹5,955 Cr	—

🟢 Revenue has grown at 18.6% a year over 3 years.

🟢 PAT (Net Profit) has grown at 15.7% a year over 3 years.

🟢 EPS has grown at 15.7% a year over 3 years.

🟡 ROE has held roughly flat at 13.8% over 3 years.

🔴 Total Debt has grown at 19.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹85,795 Cr

Total Liabilities

₹70,902 Cr

Total Debt

₹60,918 Cr

Cash & Equivalents

₹579 Cr

Operating Cash Flow

-₹5,892 Cr

Capex

-₹62 Cr

Shareholding (proxy)

Institutional Holding

16.7%

Insider Holding

0.0%

Corporate Actions

Next Earnings

02 Nov 2026

Dividend Rate

₹40

Ex-Dividend Date

06 Jul 2026

Analyst Consensus

Recommendations

5 Buy · 4 Hold · 0 Sell

Target Price (Mean)

₹5,099.22

+20.1% vs CMP

Target Range

₹4,765 – ₹5,880

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

1 positive5 general

Sundaram Finance Share Price: price action and fundamentals

Univest, 12 Oct

Sundaram Finance Ltd. Peer Comparison – Compare with Others

Value Research, 29 Aug

Should You Be Adding Sundaram Finance (NSE:SUNDARMFIN) To Your Watchlist Today?

Simply Wall Street, 10 Sept

Sundaram Finance - Radhakishan Damani’s portfolio: How his top 5 stock holdings fared in a month

The Economic Times, 25 Aug

Sundaram Finance Holdings Share Price

Upstox, 05 May

Sundaram Finance consolidated net profit up 34 per cent in Q1 FY27

BusinessLine, 08 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
Reported insider holding is low — cross-check the official promoter shareholding % in the company's exchange filing.

DalalBaazaar Thesis

🟢Business QualityStrong18/20

🟢Financial HealthStrong17/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong10.9/15

🟢ValuationAttractive10.7/15

🟡RiskModerate6.4/10

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself.

This thesis breaks if

✓Revenue growth stays above 14% a year18.6% CAGR
✓Return on equity stays above 12%13.8%
✓Valuation vs its own median of 31.0x21.2x today