The rating agency, Crisil, has assigned a ‘stable’ rating to Sundaram Finance’s Rs 1,000-crore NCD issue. The ratings reflect the Sundaram Finance group’s “comfortable asset quality, diversified resource profile, adequate capitalisation and strong management,” Crisil said today.

Sundaram Finance’s asset quality is healthy, as reflected in its gross and net non-performing asset (NPA) ratios of 0.6 per cent and 0.1 per cent, respectively, as on March 31, 2012.

Gross NPA ratio of Sundaram BNP Paribas Home Finance Ltd, its housing finance subsidiary, also remained low at 0.3 per cent as on March 31, 2012 and is among the lowest in the housing finance industry. CRISIL believes that the Sundaram Finance group will maintain comfortable asset quality across asset classes over the medium term.

Sundaram Finance’s capitalisation is adequate for its current scale of operations; its overall capital adequacy ratio was 16.3 per cent of its risk-weighted assets as on March 31, 2012, and its net worth coverage for net NPA ratio was high at above 170 times as on March 31, 2012.

Sundaram Finance is the only non-banking financial company (NBFC) in India with a track record of over five decades in the commercial vehicles (CV) financing business. The management’s experience and understanding of the vehicle finance business has enabled it to withstand multiple business cycles. CRISIL’s assessment of the Sundaram Finance group’s credit risk profile continues to factor in the group’s strong management as a key rating parameter.

On the NSE today, the Sundaram Finance’s share closed at Rs 824.

(This article was published on August 16, 2012)
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