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Financial statement analysis Mahindra finance vs SF

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Financial statement analysis Mahindra vs sundaram finance

Financial statement analysis Mahindra vs sundaram finance


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  • 1. Sundaram Finance Limited Mahindra & Mahindra Financial Services Limited Group 25: Ananth | Divya | Nachiketas | Neha | Reeti
  • 2. Introduction:  According to the Economic Survey 2010-11, it has been reported that NBFCs as a whole account for 11.2 per cent of assets of the total financial system  NBFC are not required to maintain CRR and SLR but they do not have access to the low cost demand deposits.As a result their cost of funds is always high, resulting in thinner interest spread  NBFCs have been pioneering at retail asset backed lending, lending against securities, microfinance etc and have been extending credit to retail customers in under-served areas and to unbanked customers.  In case of NBFCs the benefit is that in most of the funding transaction there is exposure on the asset and not on the corporate, unlike in case of banks Non Banking Financial Sector
  • 3. About the companies  Started in 1991; Headquartered in Mumbai  Leading Rural NBFC and the top tractor financer in India; It has 657 branches and 2.5 million customers  Products and services offered includeVehicle, SME & housing Financing, Personal loans, Insurance broking, Mutual Fund distribution and Fixed deposits  Net worth of 4454.58 cr. Witnessed a 42.3% growth in PAT (882 cr) Mahindra & Mahindra Financial Services  Started in 1954; Headquartered in Chennai  It has 564 branches ,2 lakh depositors and nearly 100,000 commercial vehicle and car finance customers.  Products and services offered include Deposits,Car Finance & commercial vehicle finance,Tyre and tractor Finance, Fleet Card  Net worth of 2086.71 cr. Witnessed a 15.38% growth in PAT (410 cr) Sundaram Finance Introduction:
  • 4. Capital Adequacy Asset Quality Management Capability Earning Potential Liquidity & Solvency Growth 0 5 10 15 20 2012 2013 Tier I Capital Ratio Sundaram Mahindra 0 1 2 3 4 5 2012 2013 Tier II Capital Ratio Sundaram Mahindra 0 20 40 2012 2013 CapitalAdequacy Ratio Sundaram Mahindra All numbers are in % terms M&M Finance better for investors and managers (16% CAR) but Sundaram better for creditors (17.9% CAR)
  • 5. Capital Adequacy Asset Quality Management Capability Earning Potential Liquidity & Solvency Growth 0 1 2 3 4 2012 2013 Gross NPA/Assets Sundaram Mahindra 0 0.5 1 1.5 2012 2013 Net NPA/Assets Sundaram Mahindra All numbers are in % terms Sundaram Finance has better quality assets, good for creditors. But M&M is better for managers and investors
  • 6. Capital Adequacy Asset Quality Management Capability Earning Potential Liquidity & Solvency Growth 0.17 0.18 2012 2013 AssetTurnover Sundaram Mahindra 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 2012 2013 Efficiency Sundaram Mahindra Sundaram Finance manages assets better, but Mahindra spends less to earn more
  • 7. Capital Adequacy Asset Quality Management Capability Earning Potential Liquidity & Solvency Growth 0.00 5.00 2012 2013 Return on Assets Sundaram Mahindra 22.00 23.00 24.00 25.00 2012 2013 Return on Equity Sundaram Mahindra 0 10 20 2012 2013 Net Interest Margin Sundaram Mahindra M&M Finance offers greater net interest margins and higher returns on assets and equities, preferred by managers, investors and creditors 18 19 20 21 22 23 24 2012 2013 Net Profit Margin Sundaram Mahindra Net Interest Margin and Net Profit Margin are in % terms
  • 8. Capital Adequacy Asset Quality Management Capability Earning Potential Liquidity & Solvency Growth 0 5 2012 2013 Current Ratio Sundaram Mahindra 0 5 2012 2013 Debt/Equity Ratio Sundaram Mahindra M&M Finance has more liquidity than Sundaram Finance, therefore better for managers, investors and creditors. Sundaram Finance is more highly leveraged, therefore better 0 0.5 1 1.5 2 2.5 2012 2013 Interest Coverage Sundaram Mahindra
  • 9. Capital Adequacy Asset Quality Management Capability Earning Potential Liquidity & Solvency Growth 1,108.06 1,252.31 1,415.38 1,856.83 2,396.51 2009 2010 2011 2012 2013 Sundaram: CAGR 835.41 1,018.65 1,399.18 2,096.02 2,998.41 2009 2010 2011 2012 2013 Mahindra:CAGR 16.7% 29.12% 0 4 8 12 16 Sundaram Mahindra P/E Ratio 0 2 4 2012 2013 DividendYield Sundaram Mahindra M&M Finance has a CAGR of 29% (vis a vis Sundaram Finance, 16%) and a higher P/E ratio. Managers, investors and creditors would prefer growth prospects of M&M Finance Dividend Yield is measured in % terms
  • 10.  Calculations were made using data from Bloomberg  All relevant Excel sheets are attached below: