Sundaram Finance (SUF IN) – Q2FY27 Result Update – AUM growth picks up; Credit costs a key monitorable – Upgrade to ‘BUY’
Published on 05 Nov 2026
Q2FY27 has seen a pick-up in disbursement growth (+28% YoY) with continued improvement in economic activity despite prevailing geopolitical uncertainty. Q2 AUM grew 19% YoY to INR 659.9bn and we build a run-rate of 19%/18% for FY27/28E. Calculated NIM improved QoQ to 5.56%; we expect it to compress in FY27/FY28E at 5.5%/5.4% due to lower yields and elevated CoF. Asset quality trend saw a deterioration in Q2 (GS3/NS3 at 1.84%/ 0.91%) and we build a credit cost of 95/86bps in FY27/28E. We tweak our FY28/ FY29E estimates upward factoring in pick up in growth and normalization of credit costs. We value SUF’s standalone business at INR3,928 (2.5x ABV) and assign a value of INR1,152 to subsidiaries with a 20% holding company discount to arrive at TP of INR4,850 on Sep’28 ABV. Upgrade to BUY.
