Sundaram Finance Ltd Reports Strong Quarterly Growth, Upgrades Outlook

Quarterly Performance Surges to New Highs

The December 2025 quarter saw Sundaram Finance achieve its highest-ever net sales at ₹2,513.95 crores, a substantial increase compared to previous quarters. This surge in top-line revenue underscores the company’s ability to capitalise on favourable market conditions and expand its lending portfolio effectively within the Non Banking Financial Company (NBFC) sector.

Profitability metrics also reflected this positive momentum. The Profit Before Depreciation, Interest and Tax (PBDIT) reached a record ₹2,005.24 crores, while Profit Before Tax excluding Other Income (PBT less OI) climbed to ₹733.08 crores. Most notably, the Profit After Tax (PAT) surged to ₹592.50 crores, marking the highest quarterly profit in the company’s recent history. These figures indicate not only robust revenue generation but also effective cost management and operational efficiency.

Improved Capital Structure and Financial Health

Alongside operational gains, Sundaram Finance has strengthened its balance sheet. The company reported its lowest half-yearly debt-to-equity ratio at 4.35 times, signalling a more prudent approach to leverage and risk management. This reduction in financial gearing enhances the company’s resilience against market volatility and interest rate fluctuations, which is critical for NBFCs operating in a competitive and regulated environment.

The improved capital structure complements the company’s upgraded financial trend score, which rose sharply from 2 to 9 over the past three months. This shift from a flat to a positive financial trend reflects sustained improvements across multiple financial parameters, including revenue growth, margin expansion, and asset quality.

Stock Market Performance Outpaces Benchmarks

Sundaram Finance’s stock price has mirrored its strong fundamentals, with the share price closing at ₹5,348.50 on 3 February 2026, up 7.35% on the day and nearing its 52-week high of ₹5,415.45. The stock has outperformed the broader market significantly, delivering an 18.8% return over the past year compared to the Sensex’s 5.4% gain. Over longer horizons, the outperformance is even more pronounced, with a 3-year return of 133.9% versus the Sensex’s 36.3%, and a 10-year return of 294.1% compared to the Sensex’s 232.8%.

This sustained outperformance highlights the company’s ability to generate shareholder value consistently, supported by strong earnings growth and prudent financial management.

Mojo Grade Upgrade Reflects Enhanced Investment Appeal

Reflecting the company’s improved financial health and operational performance, MarketsMOJO upgraded Sundaram Finance’s Mojo Grade from Hold to Buy on 1 February 2026. The current Mojo Score stands at 71.0, indicating a strong buy recommendation based on comprehensive analysis of fundamentals, valuations, and technical outlook.

The company’s market capitalisation grade remains at 2, consistent with its mid-cap status within the NBFC sector. This upgrade signals growing investor confidence and suggests that Sundaram Finance is well-positioned to capitalise on growth opportunities in the financial services space.

Sector Context and Competitive Positioning

Within the NBFC sector, Sundaram Finance’s recent performance stands out for its combination of revenue growth and margin expansion. While many peers have faced margin pressures due to rising borrowing costs and regulatory challenges, Sundaram Finance has managed to improve profitability metrics, as evidenced by its record PBDIT and PAT figures.

The company’s conservative leverage strategy, reflected in the lowest debt-equity ratio in recent periods, further differentiates it from competitors who have taken on higher risk. This prudent approach enhances the company’s credit profile and positions it favourably amid tightening regulatory scrutiny on NBFCs.

Outlook and Investor Considerations

Looking ahead, Sundaram Finance’s upgraded financial trend and strong quarterly results suggest a positive trajectory for the company. Investors should note the company’s ability to sustain revenue growth while managing costs effectively, which is critical in an environment of fluctuating interest rates and economic uncertainty.

However, as with all NBFCs, risks remain related to asset quality and macroeconomic factors. Continued monitoring of credit performance and regulatory developments will be essential for investors considering exposure to Sundaram Finance.

Conclusion: A Strong Quarter Reinforces Sundaram Finance’s Growth Story

Sundaram Finance Ltd’s December 2025 quarter results mark a significant milestone in its financial journey, with record revenues, profits, and an improved capital structure. The upgrade in financial trend from flat to positive, coupled with a Mojo Grade upgrade to Buy, reflects the company’s strengthened fundamentals and enhanced market positioning.

For investors seeking exposure to the NBFC sector, Sundaram Finance offers a compelling combination of growth, profitability, and prudent risk management. While macroeconomic and sector-specific risks persist, the company’s recent performance and strategic initiatives provide a solid foundation for sustained value creation.

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