SUNDARAM FINANCE HOLDINGS LIMITED

Scrip Code: SUNDARMHLD Sundaram Finance Holdings Limited (SFHL) is the demerged entity from
Sundaram Finance Limited in 2017. SFHL generates majority of its revenue as
Sector
rE HOLDING CO/ INVESTMENTS dividend from its investments which mainly comprise of TVS group entities. The
company also owns two BPO companies which provides services to group
Current Market Price ₹ 56
entities and outsourcing services to firms in about 50 countries. The current
52 Week High/Low ₹ 82 / ₹ 35 investments of SFHL are listed below.

1 Year Returns -14 % No Company Networth Holdings Networth Share PAT Share of PAT
1 Brakes India Ltd 2,322.0 6.7% 154.88 474.00 31.62
6 Month Returns 10 % 2 Turbo Energy 1,440.0 32.0% 460.80 100.75 32.24
3 IMPAL 1,010.0 18.6% 187.76 35.00 6.51
Face Value ₹5
4 Lucas- TVS 930.0 5.3% 49.48 91.00 4.84
EPS (12 Month) ₹ 3.7 5 Sundaram Clayton 690.0 11.2% 77.56 6.65 0.75
6 Wheels India 570.0 13.6% 77.41 50.00 6.79
Book Value per share ₹ 123 7 Delphi TVS 375.0 3.2% 11.96 73.00 2.33
Dividend Yield 2.5 % 8 Dunes Oman LLC 200.0 43.7% 87.38 17.00 7.43
9 Flomettalic India 153.0 40.6% 62.16 10.00 4.06
Trailing 12M Revenue (Crores) ₹ 83 10 Axles India 136.0 38.8% 52.78 12.00 4.66
11 Other Investments 146.0 NA 26.50 9.10 3.98
Trailing 12M Net Profit (Crores) ₹ 32
Total 7,972.0 1,248.7 878.5 105.2
Market Cap (Crores) ₹ 846 *All figures in Crores * Source: Annual Report

The networth quoted by SFHL in its annual report is ₹ 1,248.7 Crores, which is a
very conservative figure when compared to the intrinsic value of its portfolio
Shareholding Pattern companies. Take for example, its 11.2% stake in Sundaram Clayton LTD (SCL)
which is valued at ₹ 77.56 crores in the annual report. SCL holds 57.4% in TVS
Motors, based on 2-DEC-2020’s market capitalization of TVS Motors, the stake
is worth 1,330 crores. The entire market cap of Sundaram Holdings now is only
₹ 846 crores. Similarly, all the other holdings are conservatively valued in its
33.39% Annual report. The holding company discount should not be there for some
investments like IMPAL, where the investment of SFCL belong to the non-
promoter category. The current value of the investment in IMPAL is approx.
52.92% ₹ 150 crores. The BPO business of SFHL reported revenue of ₹ 63 crores for FY20.

Those Investors who seek value, good corporate governance and attractive
divided yield can consider SFHL with a three-year time frame. The downside will
13.69% be limited, and the market will definitely give a rerating to the stock if SFHL
exit/dilute stake in any of its portfolio investments and unlock value. Investors
Promoters Institutions Public can recall how EID Parry gained this year when it sold stake in Coromandel
International, which was considered a promoter stake and analysts never
expected EID Parry to reduce stake.

Price Movement
120 Financials (Crores)
100
80 Particulars H1 FY21 FY 2020 FY 2019 FY 2018
60
Income 75 94 120 74
40
20 Expenses 25 29 25 15
0 Operating Profit 50 65 95 59
Net Profit 47 61 84 54