Tag: Sundaram Finance

Sundaram Finance raises ₹200 cr in third tranche of High Yield Secured Real Estate Fund

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Buoyed by the earlier performance, Sundaram Finance has raised ₹200 crore in the third tranche of its High Yield Secured Real Estate Fund within a month of its launch and targets mopping up ₹700 crore in coming days.

The fund will seek to use its focused and robust credit policy to create risk-adjusted returns and periodically distribute cash to reduce risks and provide a current income model for its investors.

Risk mitigation strategies

Karthik Athreya, Head of Strategy, Alternate Credit, said the funds have significant risk mitigation strategies that are differentiated in the market in terms of underwriting methods and diligence focus.

Sundaram Finance Holdings: Why you should accumulate this oft-ignored small-cap stock

The real estate space is exhibiting growth — sales numbers reaching pre-Covid levels, prices remain in line in the company’s key markets and supply is managed. The growth is aided by the low interest rates offered by banks, attractive pricing, and incentives offered by developers, he said.

ESG compliance

Harsha Viji, Executive Vice-Chairman, Sundaram Finance, added, “Our focus across various investment strategies, going forward, is to also transition our portfolio into ESG compliance over the next few years, reflecting the strong vision of Sundaram Group as a responsible corporate citizen.”

Sundaram Finance eyes ‘decent’ growth in FY22 amid limited stress

The third series of AIF Cat II funds will invest in senior secured credit of real estate developers based out of South India. Fund III follows the better performance of the earlier two similar funds that raised over ₹840 crore and built a diversified asset book of 18 investments to date that are generating 18-20 per cent gross IRRs.

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Quarterly Results: Sundaram Finance Q2 net up 10%

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The capital adequacy ratio stood at 23.4% (tier I at 16.3%) as on September 30, 2021 as compared to 19.3% (tier I at 13.7%).

Sundaram Finance (SFL) on Monday reported a net profit of Rs 211 crore for the second quarter of FY22, compared with Rs 192 crore in the corresponding quarter of last fiscal, recording a growth of around 10%. Total income of the Chennai-based company grew 3% to Rs 1,025 crore, against Rs 998 crore.

SFL in a statement said the second quarter witnessed recovery across most macro-economic indicators. Disbursements for the quarter recorded a growth of 14% to Rs 3,621 crore, compared to Rs 3,174 crore in Q2 FY21.

Gross NPA and net NPA as on September 30, 2021 stood at 3.85% and 2.48%, respectively, compared with 4.59% and 3.38%, respectively, as on June 30, 2021 and 2.44%and 1.44% as on September 30, 2020.

Harsha Viji, executive vice chairman, SFL, “Every month in the second quarter has seen improvement in both business growth and collections. The vicious second wave appears behind us. That said, overall recovery to a new normal will take time. Customer sentiment has significantly improved, and the second half of the year will likely see broad-based recovery.”

The capital adequacy ratio stood at 23.4% (tier I at 16.3%) as on September 30, 2021 as compared to 19.3% (tier I at 13.7%).

Rajiv Lochan, MD, said :“We have made good progress on both growth and asset quality in the second quarter. While stress continues in Covid-impacted sub-sectors, we remain focused on supporting our customers in resuming their business activity from the disruptions imposed by the pandemic. Despite supply challenges due to the global chip shortage, demand is improving across asset classes.”

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MD Rajiv Lochan, BFSI News, ET BFSI

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Sundaram Finance that built a lending business by financing truck purchases is preparing for the next phase of growth by funding more asset classes amid a possible boom in rural incomes and the government’s infrastructure projects, its chief executive said.

While its traditional way of doing business like physical interaction and verification of customers’ credit worthiness is unconventional, it would leverage digital, technology and data without compromising on its ethos of safety and customer orientation.

The company, which has been diversifying into funding of passenger cars, construction and farm equipment in the past few years, would look at co-lending to build newer asset classes, said Rajiv Lochan, a former McKinsey consultant who is now the managing director of the Chennai-based lender.

“The opportunities for growth and prosperity for the next five to 10 years are unprecedented,” said Lochan who succeeded TT Srinivasaraghavan who headed the company for 18 years. “What will be different is probably technology, digital, and data… Under the waterline, more enablement will happen through technology and data science, that will be different.”

Sundaram Finance, started in 1954, has been a conservative lender to truck buyers. But in the past few years it diversified into other streams of lending including funding cars as competition grew. It now looks to take advantage of technology and the prospects for the Indian economy which is set to witness a boom in rural economy and infrastructure building.

“Rural India continues to remain quite strong, and therefore bodes well for the future,” Lochan said. “On the back of normal monsoons, good procurement, good sowing, and with the downside fears not coming through, the rural segment has been quite robust.”

He said a good indication of this was the results that FMCG companies have witnessed both on volume and price fronts. Lochan, however, said the urban markets too were seeing more optimism and confidence partly driven by the progress in vaccination. He further added that the company would remain an asset lending provider, going beyond commercial vehicles into passenger cars, material handling and construction equipment.

“The infrastructure space seems to be in dramatic investment mode right now. And likewise, with the rural agri opportunity opening up on the back of unprecedented reforms in that space, which hopefully we’ll see implementation over the next few years, I think opportunities in that space will also open up.”

The government has accelerated spends in rural areas through schemes for housing, direct transfer of subsidies. It also recently announced the Gati Shakti programme which would absorb the National Infrastructure Projects worth ₹110 lakh crore.



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Sundaram Finance eyes ‘decent’ growth in FY22 amid limited stress

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Sundaram Finance Ltd, a leading NBFC in the country, said it continues to see accounts from a few segments seeking restructuring and delinquency rates move northwards amid improving business.

Though business is returning to pre-second wave levels, there are still accounts up for restructuring, especially in the education and school bus segment, which is a fairly big portfolio for the company. Tourist buses have been impacted, as have inter-State buses.

In the car segment, tourist taxis have been impacted. In pockets, market load operators on haulage have been affected, said Rajiv Lochan, Managing Director, Sundaram Finance, in an exclusive interaction with BusinessLine.

As of March 31, the company had restructured 4.2 per cent of its portfolio, and this financial year it has further restructured 2.6 per cent. That is higher than industry. Delinquency rates increased to 4.2 per cent by the end of June.

“We are still quite good compared to the industry,” he added.

Growth complications

The first round of restructuring last year was in the commercial vehicle (CV) and bus segments.

Many who expected recovery in Q4 did not opt for it. Some school bus operators, inter-State bus operators and tourist buses expected recovery this year, but the second wave hit them hard and they have come for restructuring now.

The other complication is that viability of operators has been impacted. Freight rate has not increased in the last six months, there has been excess capacity in the system, return trips have been empty, and diesel prices have gone up. There are also Covid-related temporary issues.

Rallying business

Nevertheless, business has been picking up and getting better every succeeding month. September is also trending well.

“Compared to FY20, we will still do decent, especially if the third wave does not hit us too badly. We have to go granular. In terms of growth, that’s the thrust. We are seeing steady progress,” Lochan said.

There are a few segments that promise a favourable growth outlook for the company in the coming years. The tipper and construction equipment (CE) segments have picked up on the back of infrastructure activities.

Also see: Sundaram Finance presents favourable near-term outlook amid caution

“I expect a secular positive growth in the next three years in CE, which constitutes over 10 per cent of our business. It has gained momentum in the last three years and I see it gaining even more traction going forward. The agri-related segment (tractors or farm equipment) that constitutes about 7-8 per cent is doing well. Going forward, we expect to see double digit growth in this segment,” said Lochan.

Within the CV segment, the company has diversified into the intermediate CV, used CV, light CV and small CV segments over the last decade, and these are witnessing growth driven by e-commerce.

“We are seeing a nice momentum in this space. There is real action for us in these three asset classes. In the passenger vehicle segment, which constitutes 25 per cent of the business, we will ride with the wave,” Lochan added.

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Sundaram Finance presents favourable near-term outlook amid caution

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The adverse economic impact of the Covid second wave is expected to be limited to the first quarter of this fiscal, said S Viji, Chairman, Sundaram Finance.

“The tapering of the second wave coupled with aggressive vaccination drive has brightened the near-term prospects for the economy, with the adverse economic impact expected to be limited to the first quarter of FY22,” Viji said while addressing the 68th annual general meeting of the company virtually on Monday.

“The agricultural sector has turned buoyant with a near-normal monsoon, robust procurement by the government and improved Kharif sowing,” he added.

The re-establishment of GST collections to ₹1 lakh+ crore levels, increase in fertiliser sales, improved e-way bill activity, increase in power and fuel consumption, and growth in eight core industries all point to a sequential improvement in economic activity from the disruptions induced by the Covid second wave.

Also read: Sundaram Finance posts 16 per cent rise in Q1 net profit at ₹192 crore

However, the country’s ability to mobilise vaccines at scale, maintain the pace of vaccinations, and containment of the virus spread, especially as new variants emerge, will all be determinants of consumer confidence sustaining and consequently of economic recovery,” he said.

Festival season for auto

“While the automotive sector has been facing production constraints due to the global shortage of semiconductors, the recent pandemic-driven lockdowns in East Asia are compounding the challenge. This, coupled with higher input prices on fuel and commodities, presents the risk of a dampener to the upcoming festival season”, said Viji.

Focus areas

Given the level of uncertainty and volatility, Sundaram Finance to focus on striking a judicious balance between growth, quality and profitability (GQP), the time-tested trinity that has served the company well.

“Key priorities will be to support loyal customers tide over the aftermath of the Covid crisis by deploying all measures made available by the regulator and the government, drive collections and recovery efforts with a view to maintaining the traditional asset quality levels and preserving capital, and prudently pursuing growth opportunities that emerge as economic activity resumes post second wave across the well-understood and diversified asset class base that Sundaram Finance has established.” he stated.

Emerging growth areas

As the economic activity revives, the company expects the commercial vehicle segment to bounce back strongly. “In the CV space, in addition to growth in the M & HCV space, we believe that the SCV and ICV segments will continue to offer growth opportunities. In the passenger vehicle segment, we see a long run way as the consumer market matures and grows in India,” said Rajiv Lochan, Managing Director, Sundaram Finance.

The company also sees favourable growth opportunities in construction equipment and tractor segments due to heightened activities across infrastructure and the rural and agricultural sectors on the back of government push.

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Sundaram Finance to revise interest rates on deposits, BFSI News, ET BFSI

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Chennai, Aug 6

K Surendran BJP state president (File photo)

Non-banking finance company Sundaram Finance Ltd has announced a revision in interest rates on its deposits with effect from August 8, the company said on Friday. According to a company press release, the interest rate on fresh deposits and renewals stand revised to 5.50 per cent per annum as against 5.75 per cent earlier, for deposits with a tenure of 12 months

Interest rates have been revised to 5.65 per cent per annum as compared to the earlier 6 per cent, for deposits with a tenure upto 24 months.

For deposits upto 36 months, the interest rates have been revised to 5.80 per cent as against 6.25 per cent earlier, a company statement said.

For senior citizens, the interest rate on deposits have been revised to 6 per cent per annum as compared to 6.25 per cent for deposits of upto 12 months, 6.15 per cent per annum for deposits upto 24 months as compared to the earlier 6.50 per cent.

For deposits upto 36 months, the interest rates have been revised to 6.30 per cent as compared to 6.75 per cent earlier.

As on March 31, 2021, Sundaram Finance said its deposit base stood at Rs 4,021 crore.



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Tata Motors partners with Sundaram Finance, BFSI News, ET BFSI

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Auto major TATA Motors has partnered with city-headquartered non-banking finance company Sundaram Finance to offer exclusive offers to customers opting to purchase its range of passenger cars. Under the partnership with TATA Motors, Sundaram Finance would offer six-year loans on the new ‘Forever’ range of cars and with 100 per cent financing that would require minimal down payment, a company statement said here.

The partnership would also offer special financing ‘Kisan Car Scheme’ with extended and convenient repayment options to the farmers.

“The farmers can repay the loan in installments once every six months coinciding with their harvest”, it said.

Commenting on the partnership, TATA Motors, Vice- President, sales, marketing and customer care, Rajan Amba said, “…we are delighted to be partnering with Sundaram Finance to roll out special finance schemes. This is in alignment with our constant effort to fast track the availability of safe personal mobility solutions to individuals and families.”

“We hope that these offers will boost customer morale and make the process of purchasing a car more convenient,” he added.

On the partnership with TATA Motors, Sundaram Finance, deputy managing director, A N Raju said, “following the lockdown in several states since April, we are now seeing a recovery in the passenger vehicles segment as endorsed by the sales numbers in July.”

“Also with social distancing, we are observing a rise in the demand for ‘personal transport’ over the last 12 months. Through a lower down payment model and a lower EMI, we are proactively reaching out to the small business owners and making car ownership more affordable…”, he added.

Tata Motors in July recorded a strong jump on its total sales made in last month.

The company recorded a 92 per cent rise in its total domestic sales to 51,981 units in July 2021 as compared to the same month last year. It had sold 27,024 units in July 2020.



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Sundaram Home Finance looks to raise Rs 2,500 crore

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On the outlook, Lakshminarayanan said while the longer-term outlook remains strong with the demand for housing being expected to grow in coming years.

Sundaram Home Finance on Wednesday said that to fund its growth plans, the company is looking to raise Rs 2,500 crore this year through a mix of debt instruments and bank funding. The home finance subsidiary of Sundaram Finance on Wednesday registered a net profit of Rs 40.04 crore for Q1 of FY22, against Rs 33.94 crore in the same quarter the previous year, registering an increase of 18%.

The company has reported disbursements of Rs 249crore, compared to Rs 99.98 crore, the company said in a statement.

Lakshminarayanan Duraiswamy, MD, said, “The second wave of Covid led to an uncertainty during the quarter, but the relaxation of lockdown in most states in June led to a partial bounce back in demand in the real estate space towards the end of Q1. The disbursements in Q1 were driven by mid-market segments, especially the salaried class in tier II and III towns.”

On the outlook, Lakshminarayanan said while the longer-term outlook remains strong with the demand for housing being expected to grow in coming years. “We are cautiously optimistic on the growth prospects for the rest of the year and believe that the worst is behind us,” he said.

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Sundaram Finance net up 60% to Rs 209 crore

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The assets under the management stood at Rs 30,882 crore as on March 31, 2021, as against Rs 29,936 crore, representing growth of 3%.

Sundaram Finance on Friday registered a 60% rise in net profit to Rs 209 crore for the fourth quarter against Rs 131 crore in Q4 FY20.

The disbursements recorded 13% growth to Rs 3,305 crore as compared to Rs 2,930 crore registered in the corresponding quarter of the previous year.

The assets under the management stood at Rs 30,882 crore as on March 31, 2021, as against Rs 29,936 crore, representing growth of 3%.

Executive vice-chairman Harsha Viji said, “While the first quarter of last year was almost a complete washout due to the national lockdown in response to the Covid-19 pandemic, we saw a strong recovery in the second half led by the tractor, tipper and construction equipment segments.”

“Our double-digit disbursements growth in fourth quarter is a clear indication that we were seeing business coming back to the pre-Covid levels.”Its gross NPA and net NPA stood at 2.28% and 1.35%, respectively, compared to 2.77% and 1.92%, respectively. The cost to income closed at 31.8% in Q4FY21 as against 34.9% in Q4FY20.On the outlook for the year, Rajiv Lochan, MD, Sundaram Finance, said, “We had planned for the growth momentum of the fourth quarter to continue into this year, but the intensity of the second wave and ensuing lockdowns have created uncertainty in the environment, with our immediate focus being on the safety of our employees and customers.”The board of the company has recommended a final dividend of Rs 6 per share (60%) on the equity shares of the company subject to the approval of shareholders at the ensuing annual general meeting. This was in addition to Rs 12 per share (120%) interim dividend for FY21 declared on January 20,  2021.

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Sundaram Finance Q4 net profit rises to ₹209 crore

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Sundaram Finance has managed to post an impressive result despite a challenging year 2020-21 which not only tested but also re-enforced its core belief of customer centricity.

For the fourth quarter of FY21, the non-banking financial company (NBFC) registered a net profit of ₹209 crore compared to ₹131 crore in the same period previous year. Its disbursements in Q4 saw an increase of 13 per cent to ₹3,305 crore.

Despite a washout in the first quarter and sluggish business in the second, the NBFC posted a 21 per cent growth in its net profit in FY21. Its profit stood at ₹809 crore (₹724 crore in FY20 which also included a one-time income of ₹53 crore). This performance came amidst lower disbursement which fell to ₹11,742 crore from ₹15,175 crore in FY20.

“We tightened our belt and focussed on our GQP (growth, quality and profitability) philosophy,” said Rajiv Lochan, MD, Sundaram Finance, explaining the performance. The overall asset under management in FY21 was ₹30,882 crore (₹29,936 crore), an increase of 3 per cent.

In spite of the Covid-related challenges, the company reduced its net NPAs to 1.35 per cent compared to 1.92 per cent in March’20. The capital adequacy ratio stood at 22.10 per cent (18.4 per cent).

Covid wave

But the second wave of coronavirus with its higher intensity and broader impact is creating fresh challenges to the company in FY22. “We are seeing slippages (in recovery) of 4-5 per cent,” says Lochan. But the company is working closely with its customers to address their pain points. In FY21, it took advantage of RBI’s moratorium and restructuring sops to restructure loans worth ₹1,307 crore accounting of 4.4 per cent of outstanding principle. “We will deploy the learnings from last wave and overcome the challenge,” he added.

Recovery to be delayed

Before the second wave struck, the NBFC was hoping for a recovery in demand by the second half of FY22. Now that will be delayed. It expects the demand for the tipper segment to remain strong thanks to government’s strong infrastructure focus. But the haulage segment, it believes, will not see a recovery before the fourth quarter of FY22. “A lot will depend on vaccination, recovery in rural economy and how we handle the Covid variants,” said Lochan.

Despite a washout in the first quarter and sluggish business in the second, the NBFC posted a 21 per cent growth in its net profit in FY21.

 

 

 

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