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Systematix Research Report
Sundaram Finance Ltd.’s reported net interest income at Rs 4.2 billion, in-line with expectation, as higher-than-expected assets under management growth of 5% QoQ (7% YoY) was offset by marginal contraction of 12 bps in net interest margins at 5.3%.
However due to higher dividend income of Rs 884 million and lower credit costs of 0.3%, earnings came in ahead of estimates. AUM growth of 5.0% QoQ was on account of continued recovery in MCV and HCV along with demand in passenger vehicle.
Sundaram Finance’s asset quality improved marginally, with gross/ net stage a3 at 2.5%/ 1.4%. Restructured assets declined to 3% of AUM from 4.0% in 1Q. We expect the growth momentum in vehicle portfolio to continue, aided by good monsoon, increasing infra-activity and higher replacement demand.
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