Sundaram Finance (SUF IN) – Q3FY26 Result Update – Disbursements pick up; asset quality improves – HOLD
Published on 03 Feb 2026
Q3FY26 has seen a pick-up in disbursement growth (+14% YoY) as consumption activity picked up across sectors, aided by the GST rate reduction and the strong festive season demand. Q3 AUM grew 16% YoY, and we build a higher run-rate of 17% for FY26 and FY27, led by the pick-up in economic activity. Calculated NIM improved 18bps QoQ to 5.62%; we expect an improvement in FY26/FY27 supported by lower CoF. Asset quality trend improved (GS3/NS3 at 1.91%/ 1.06%), despite cash-flow pressures in the MSME segment, as the company is focused on collections. We tweak our FY27/ FY28E PAT and roll forward to Mar’28E valuing SUF’s standalone business at Rs4,523 (2.9x ABV vs. 2.8x earlier) and assign a value of Rs977 to subsidiaries with a 20% holding company discount to arrive at TP of Rs5,500. While outlook on growth and credit cost is improving, we continue to maintain ‘HOLD’ rating as the stock price captures all the positives.
