Sundaram Finance reports a 7% drop in Q2 profit, H1 profit stays flat

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Sundaram Finance recorded a 7 per cent decline in standalone profit after tax (PAT) to ₹340 crore for Q2 ending September 30, 2024, down from ₹366 crore in the same period last year amid a significant rise in interest income, which grew 25 per cent to ₹1,373 crore compared to ₹1,098 crore in the prior year’s quarter.

Total income also rose to ₹1,612 crore from ₹1,378 crore, but higher total expenses, up 27 per cent to ₹1,147 crore from ₹902 crore, weighed on profits. Quarterly disbursements slightly decreased to ₹6,860 crore from ₹6,941 crore year-on-year.

For the half-year ended September 30, 2024, PAT remained stable at ₹648 crore, largely due to timing differences in dividend income from the previous year. Net interest income for H1FY25 increased by 19 per cent to ₹1,304 crore, up from ₹1,092 crore in H1FY24. Disbursements rose modestly by 3 per cent to ₹13,768 crore, compared to ₹13,430 crore in H1FY24.

Economic activity

“Economic activity in Q2 fell short of expectations, with monsoons dampening consumption and post-election government spending slowing. Additionally, concerns over asset quality in microfinance and unsecured lending persisted,” said Rajiv Lochan, Managing Director of Sundaram Finance. “Our balanced performance reflects our resilience, particularly as we have no exposure in these segments.”

As of September 30, 2024, Sundaram Finance’s assets under management grew 20 per cent to ₹48,058 crore from ₹40,106 crore a year earlier. The cost-to-income ratio improved to 32.27 per cent in H1FY25 from 35.18% in H1FY24. Gross and Net NPA ratios declined to 2.39 per cent and 1.55 per cent , respectively, from 2.89 per cent and 2.06 per cent a year ago.

Return on assets (ROA) dropped to 2.50 per cent in H1FY25 from 2.95 per cent in H1FY24, while return on equity (ROE) was 14.2 per cent, down from 16.2 per cent last year. “We are cautiously optimistic about economic recovery in H2 as domestic consumption, private sector capital expenditure, and government initiatives pick up pace,” Lochan added.

In its general insurance business, group company Royal Sundaram reported a PAT of ₹126 crore for H1FY25, down from ₹145 crore in H1FY24, with gross written premium (GWP) up 13 per cent to ₹2,053 crore from ₹1,818 crore.

Sundaram’s asset management segment closed H1FY25 with assets under management of ₹76,845 crore (around 85 per cent in equity) achieving a consolidated profit of ₹68 crore, up from ₹49 crore in H1FY24.