Sundaram Finance Changes Its Business Mix For Growth

Sundaram Finance - powered by vehicle financing

Sundaram Finance - powered by vehicle financing
Sundaram Finance - powered by vehicle financing | Source

Sundaram Finance - Share Price Trend

 
 
 
Weekly H/L
651
572
Monthly H/L
651
524.05
52 Weeks H/L
651
420
 
( 10 Feb 12 )
( 30 Dec 11 )
Delivery / Var+ELM %
73.18
12.84
Sundaram Finance - Share Price Trend

Sundaram Finance - Stock Market Position at NSE

Quantity Traded
Deliverable Quantity (gross across client level)
% of Deliverable Quantity to Traded Quantity
27927
19194
68.73

IT arm spreads its wings


LCV Segment Growing Fast

For the first nine months of the current financial year ended 31.12.11, volumes of light commercial vehicles was 3.27 lakhs units while volume of medium and heavy commercial vehicles accounted for 2.44 lakh units. For the last two years, LCVs are growing faster than MCVs and HCVs. For the next five years, it is estimated that for every 3 LCVs sold, only one MCV or HCV will be sold. Small is beautiful seems to be true in the commercial vehicles sector. Moreover the average life of a commercial vehicle is also getting longer because of the improvement in vehicle manufacturing technology and good roads being laid.

IT Arm Spreading Its Wing

Sundaram Infotech, the information technology wing of Sundaram Finance, has forayed into infrastructure management services (IMS). It will be targeting customers in financial services, auto, retail industries and agricultural sciences. The company has roped in the services of the experienced G N Sivaramakrishna for growth. Sivaramakrishna was Vice President, India Business, in Keane India Ltd. Already Sundaram Infotech has the experience in managing the IT infrastructure of the entire 500 branches of Sundaram Finance all over India. Now it is confident of offering its expertise and services to other companies outside to tap growth. Malli J Sivakumar is the CEO of Sundaram Infotech. Sundaram Infotech will be investing a sum of around $3 million in the next two years. 85 persons are working in the company’s data centre. The IMS offering of the company will include application hosting, remote server administration, management services, installing, running and maintaining the entire IT infrastructure of the client. Sundaram Infotech will also assist small and medium sized companies to outsource the management of their remote data protection.

Public Can Invest In The FD Schemes Of The Company Without Fear

Sundaram Finance has introduced an eighteen months fixed deposit scheme for the public. It will offer 10.25% p.a. interest for the senior citizens and 9.75% p.a. for the general public. Sundaram Finance is a dependable company and the general public can invest in its fixed deposit schemes without fear of losing their money.

Buy At Declines

One can invest in the shares of Sundaram Finance at declines. As the current share price is close to its yearly high, investors can wait patiently for the share price to come down to around Rs.500 to Rs.550 for medium and long term investment to get decent returns.

Your Vote Please

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Sundaram Finance - Share Price Movement

Sundaram  Finance - Share Price  Movement
Sundaram Finance - Share Price Movement | Source

Sundaram Finance - Latest Results

(in Cr.)
Dec-11
Sep-11
FY10-11
Revenue
444.11
400.99
1,370.78
Net Profit
91.15
90.73
295.23
EPS
16.41
16.33
53.15
Cash EPS
19.64
19.39
62.99
OPM %
86.2
86.24
87.02
NPM %
20.52
22.63
21.54
 
 
 
 

Sundaram Finance Changes Its Business Mix For Growth


Good Quarterly Results

Sundaram Finance has produced good results for the quarter ended 31.12.11 as compared to the previous quarter. While revenue has risen from INR 401 crore to INR 444 crore, net profit has marginally risen from INR 90 crore to INR 91 crore (see tables above). The shares of Sundaram Finance are traded in the Indian stock markets at Rs.645 (BSE 10.02.12). The shares of Sundaram Finance are available in both BSE and NSE. The face value of the company’s share is Rs.10. The company is engaged in the financial services activity. If we compare the results on a year-on-year basis, revenue has increased from Rs.347 crore in the corresponding period of the previous year to Rs.444 crore now. Net profit has increased from Rs.70.68 crore in the corresponding period of the previous year to Rs.91.15 crore now. The paid-up capital of the company stands at Rs.55.55 crore. Free reserves are at Rs.1473 crore at the end of last year. The company’s Registered Office is located at 21, Pattullos Road, Chennai 600002. T.T. Srinivasaraghavan is the Managing Director of the company.

Increased Focus On Equipment And Tractor Financing

The company has been benefited due to its increased focus on equipment and tractor financing during the quarter. The company correctly anticipated a slowdown in the growth of medium and heavy commercial vehicles due to high interest rate and inflation. Sundaram Finance turned its attention towards financing purchase of other vehicles like tractors and construction equipment vehicles. Harvest has been good in India for the last five or six years. Therefore, farmers are increasingly going for purchase of new tractors. Tractor financing has become a profitable business for banks and financial institutions.

Demand For Construction Equipments Bound To Grow

In the past, commercial vehicles financing was the dominant sector of business for the Chennai-based Sundaram Finance. But the trend has changed now. Today, commercial vehicles segment contributes only 50% of the company’s business. Car loans contribute around 30% and the remaining 20% is taken by other segments, which is increasing. Construction equipment finance is contributing Rs.700 crore businesses for Sundaram Finance. As the shortage for manual labourers increases in the construction sector due to the NREGA scheme, the demand for construction equipments will also increase to a great extent.

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