Author: Sahilee Todkar
Introduction:
Sundaram Finance Limited is an Indian financial and investment service provider, based in Chennai. The company offers consumer loans, wealth management, commercial finance, investment banking, private equity, treasury advisory, credit cards and infrastructure finance, among others. Sundaram Finance Limited was established in 1954. The company is registered with the Reserve Bank of India (RBI) as a Systematically Important Deposit Accepting Non-Banking Financial Company.[5] As of December 2017, the company has a market capitalisation of ₹26,000 crore and operates through more than 640 branches across the country.
Objective:
To calculate Beta of Sundaram Finance Ltd. and see its significance
Literature Review:
Sundaram Finance Ltd and Care Health Insurance enter into corporate agency agreement
Sundaram Finance Ltd, one of the most respected financial services groups in India, and Care Health Insurance, one of the country’s leading specialized health insurers, entered into a Corporate Agency Agreement today. The event was attended by Rajiv Lochan, Managing Director, Sundaram Finance Ltd and Anuj Gulati, Managing Director & CEO, Care Health Insurance. New Delhi [India], December 20 (ANI/PRNewswire): Sundaram Finance Ltd, one of the most respected financial services groups in India, and Care Health Insurance, one of the country’s leading specialized health insurers, entered into a Corporate Agency Agreement today. The event was attended by Rajiv Lochan, Managing Director, Sundaram Finance Ltd and Anuj Gulati, Managing Director & CEO, Care Health Insurance. With this association, Sundaram Finance will offer Care Health’s specialised and innovative range of health insurance solutions to its loyal and increasing base of customers. Products will be offered in the retail and group segments of Sundaram Finance’s customers, who in addition to the company’s existing portfolio of technology-driven and customised offerings, can now have their diverse insurance needs addressed under one umbrella. Rajiv Lochan, Managing Director, Sundaram Finance Ltd, said, “We are delighted to tie up with Care Health Insurance, among the top companies in the health insurance business in our country, to offer our customers across India a range of innovative health insurance products. The pandemic has brought about a paradigm shift in the insurance industry and health insurance solutions have become a must-have option for Indian households. We are eager to play our part in securing the health and wellness of our customers. Sundaram Finance was established in 1954 and the company has today grown into one of the most trusted and diversified financial services groups in India, providing financing for commercial vehicles, cars and utility vehicles, tractors and farm equipment, construction equipment, SME finance and a range of working capital products for financing diesel, tyres, insurance as well as working capital for SMEs. Through its subsidiaries and group companies, the company offers home finance, loans against property, mutual funds and investment management solutions and the full range of general insurance products and services. It has a nation-wide presence of over 600 branches, nearly 1.2 lakh depositors and over four lakh lending customers. Sundaram Finance’s vision is to be the most respected NBFC in the country and its mission is to deliver the Sundaram experience to all customers, big and small, in keeping with the ethos of the Company.
Short Term Picks: Sundaram Finance Holdings Ltd
Incorporated in 1993, Chennai-based Sundaram Finance Holdings Ltd. (SFHL) is a part of the Sundaram Finance Group and is engaged in the business of investments, business processing and support services in India, Australia, the United States and the United Kingdom. The company primarily has investments in the automotive business and offers outsourcing services to large and mid-sized firms. It is also engaged in shared services business comprising transaction processing, accounts payable processing, tele-calling, training, learning, and development. The company was formerly known as Sundaram Finance Investments Ltd. And changed its name to Sundaram Finance Holdings Ltd. In March 20 17. For Q3FY21, SFHL posted a net profit of Rs.2 crore on 8% higher sales of Rs.13 crore. The promoters hold 52.92% of the equity, FIIs hold 0.17%, DIIs hold 6.34%, which leaves 40.57% with the investing public. SFHL has equity capital of Rs.75 crore supported by reserves of Rs.1781 crore. Its share book value works out to Rs.123. Based on the company’s potential and bright prospects, Sundaram Finance Holdings Ltd can be a profitable investment option. At the CMP of Rs.78, we recommend this stock with a stop loss of Rs.70 with a target of Rs.115-125 in the short-term and Rs.160 in the long-term. The 52-week high/low of the stock has been Rs.35/87.
Data Collection:
The data for Nifty and equity company ‘Sundaram Finance Ltd ‘ has been downloaded from two websites, namely, yahoofinance.com and nseindia.com respectively, from historical data head, for the period, ‘ November 1st 2022’ to ‘ October 31st 2023’. The data was manipulated for arriving at the Friday closing prices for Nifty and Equity. The returns on Nifty were named as ‘X’ and subsequently, returns of Equity were named as ‘Y’. They both regressed.
Data Analysis:
SUNDARAM FINANCE = 0.084+0.044 NIFTY
N=48, R square= 0.0042, F= 0.1979
The above equation shows the relationship of ‘Sundaram Finance Ltd.’ With ‘Nifty’.
If Nifty rises by 1 unit, ‘Sundaram finance’ will rise 0.044 unit
t-stat for b is 0.445 and the p value is 0.66 which is more than 0.05 so b=0, meaning ‘Nifty’ does not impact ‘Sundaram Finance Ltd.’
R square Is 0.0042, meaning there is relationship at all, nothing is explained by Nifty.
F= 0.198, and p value is more than 0.05, so the model is not statistically significant at 5% level, further Nifty does not affect the share significantly.
Conclusion:
The results indicate that beta (0.044) is less than 1, so good for long term investment.
References:
1.Asian News International Retrieved from(2022, Dec 20). Sundaram finance ltd and care health insurance enter into corporate agency agreement.
2. Money Times, Retrieved from Oza, A. (2021, Feb 22). Short term picks: Sundaram finance holdings ltd.