Sundaram Finance's Q1 FY25 results show growth in sales and profits, but concerns remain.

Sundaram Finance, a leading finance and non-banking financial company (NBFC) in the largecap industry, recently announced its financial results for the quarter ending June 2024. The company’s stock has been given a ‘Hold’ call by MarketsMOJO.

According to the financials, Sundaram Finance has shown a flat performance in the quarter, with a score of 4 out of 10, compared to 8 in the previous quarter. However, there are some positive aspects to the company’s performance.

The net sales for the half-yearly period have grown by 33.96% year on year, indicating a positive sales trend in the near term. The company has also recorded its highest profit after tax (PAT) in the last five quarters, with a positive trend in the near term. This shows that the company is becoming more profitable and creating higher earnings for its shareholders.

Sundaram Finance also has a strong cash position, with the highest cash and cash equivalents in the last six half-yearly periods. This indicates an improvement in short-term liquidity for the company. Additionally, the dividend payout ratio has been consistently high in the last five years, showing that the company is distributing a higher proportion of its profits as dividends to its shareholders.

However, there are some areas of concern for Sundaram Finance. The operating cash flow has been consistently falling in the last three years, indicating a decline in cash revenues from business operations. The debt-equity ratio has also been increasing, reaching its highest level in the last five half-yearly periods. This suggests that the company is relying more on borrowing to fund its operations, which could lead to a stressed liquidity situation.

Another potential issue is the increase in non-operating income, which may not be sustainable in the long term. Overall, while Sundaram Finance has shown some positive aspects in its financial performance, there are also some areas that require attention. Investors are advised to hold their positions and monitor the company’s performance closely.