Prabhudas Lilladher has issued an accumulate rating on Sundaram Finance with a target price of ₹5,070 in its research report dated August 04, 2026. According to the brokerage's analysis, the recommendation is based on the company's strong operational performance and growth prospects in the current market environment.
The quarter witnessed a pick-up in disbursement growth of 22% year-on-year, demonstrating robust business momentum despite challenging market conditions. As reported by Prabhudas Lilladher, Q1 AUM grew 17% YoY to ₹622.8 billion, indicating sustained asset growth. The brokerage has built a run-rate of 17%/16% for FY27/28E based on this performance trajectory.
The calculated Net Interest Margin (NIM) compressed quarter-on-quarter to 5.43%, though Prabhudas Lilladher expects it to remain range-bound in FY27/FY28E at 5.4%/5.5% respectively. According to the research report, the lower yield environment will be offset by controlled cost of funds. Asset quality showed deterioration in Q1 with Gross Stage 3 and Net Stage 3 at 1.71% and 0.88% respectively, leading to projected credit costs of 77/82 basis points in FY27/28E.
Prabhudas Lilladher values Sundaram Finance's standalone business at ₹4,149 using 2.7x Adjusted Book Value compared to the earlier 2.6x multiple. The brokerage assigns a value of ₹1,152 to subsidiaries with a 20% holding company discount to arrive at the target price of ₹5,070. The firm has slightly tweaked its FY27/FY28E estimates upward factoring in the pick-up in growth and controlled cost of funds and operating expenses.
