More Stories

Informist, Monday, Aug. 4, 2025

By Janwee Prajapati

MUMBAI – Sundaram Finance reported a sequential fall in net profit for the June quarter despite an increase in revenue as provisions rose almost twice the increase in revenue from operations in absolute terms. Total expenses rose almost 19% sequentially and far outstripped the 4.5% sequential rise in revenue from operations. Total expenses rose on account of an increase in finance cost and employee cost. The company missed the Street's expectations on both the bottom line as well as revenue. 

Sundaram Finance reported a standalone net profit of INR 4.29 billion for the latest quarter, down 21.4% on quarter. The net profit was lower than analysts' estimate of INR 4.51 billion. The company's interest income for the June quarter rose 22.2% on year to INR 15.72 billion, up 3.5% sequentially and up 22.2% on year. "Q1FY26 has seen continued macroeconomic sluggishness of the past few quarters and economic activity has been slower compared to Q1FY25," Harsha Viji, executive vice chairman said in a press release.

The non-banking finance company's total revenue from operations for the latest quarter rose to INR 18.83 billion, up 4.4% sequentially and up 28.4% on year. The provisions rose to INR 1.57 billion from a negative 11.3 million in the previous quarter. This sharp jump in provisions increased the total expenses to INR 13.26 billion from INR 11.17 billion in the trailing quarter, up 18.7% on quarter. The non-banking finance company assets under management rose 17% on year to INR 532.78 billion.

The lender's gross stage 3 assets, which indicate loans overdue for more than 90 days, increased to 1.91% in the June quarter, up 35 basis points on year. The stage 3 assets net of provisions also rose 24 bps from the year-ago quarter to 1.08%.

"Overall, for the quarter, industry sales in segments and geographies we operate in were well below market expectations," Rajiv Lochan, managing director said. "Our focus on extending our market share remains resolute. Looking ahead, the monsoons have been above normal, procurement likely to be robust and therefore, rural sentiment is expected to improve." The lender's loan disbursements in the June quarter rose 6% to INR 73.10 billion on year.

The capital adequacy ratio of the financier rose to 20.01% in the June quarter from 19.27% in the year-ago quarter. The tier-I capital ratio stood at 17.3% as of Jun 30, up from 16.2% a year ago. The gross non-performing asset ratio stood at 2.66% in the June quarter, up from 2.21% a year ago. The net non-performing asset ratio increased to 1.71% from 1.41%.

Sundaram Finance's return on assets for the June quarter is 2.9%, up from 2.4% in the year-ago quarter. Return on equity increased to 16.7% in the reporting quarter from 13.6% in the year-ago quarter. The company's cost to income ratio improved to 29.8% from 32.9% on year.

Given external uncertainties, the lender's priority for the September quarter is to improve its asset quality significantly while driving growth in disbursements at healthy margins, Rajiv Lochan said.

Shares of the company ended 2.4% lower at INR 4,459.20 on the National Stock Exchange after the company announced its earnings. 

End

Edited by Vandana Hingorani

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000 /+91 (11) 4220-1000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.