Sundaram Finance profit growth slows as costs squeeze margins
Consolidated net profit rose 5.85% year on year, but fell 18.79% sequentially as costs grew faster and other income turned negative.
Filed 04 Nov 2026, 14:33 IST · Sundaram Finance Ltd (SUNDARMFIN)
Key takeaways
- Consolidated net profit rose only 5.85% year on year to Rs 516.66 cr as expenses grew 20.70%, faster than revenue growth of 14.75%.
- Operating margin narrowed 1.12 percentage points year on year to 77.31%, marking its third straight quarterly decline from 79.76% in Q3FY26.
- Sequential net profit fell 18.79% as other income moved from Rs 76.54 cr to negative Rs 28.79 cr and the tax rate rose 2.94 percentage points.
Price around the results
Costs outpaced revenue in Q2FY27
Sundaram Finance reported consolidated net profit of Rs 516.66 cr, up 5.85% year on year, while revenue grew 14.75% to Rs 2,737.55 cr. Expenses increased 20.70%, and interest expense rose 11.74%, limiting the conversion of revenue growth into profit. Profit before tax grew 8.92%, slower than operating profit growth of 13.11%.
Operating margin fell for a third quarter
Operating margin narrowed 1.12 percentage points year on year and 0.75 percentage points sequentially to 77.31%, because expenses grew faster than revenue in both comparisons. This was the third consecutive quarterly decline after margins of 79.76% in Q3FY26, 78.76% in Q4FY26 and 78.06% in Q1FY27. Even after the decline, the margin was 25.65 percentage points above the 51.66% median for 93 Financial Services peers that had reported.
Other income and tax drove the sequential drop
Sequential profit before tax fell 15.53%, with other income moving from Rs 76.54 cr in Q1FY27 to negative Rs 28.79 cr in Q2FY27; other income represented negative 4.08% of current-quarter profit before tax. The tax rate also rose from 23.77% to 26.71%, a 2.94-percentage-point increase. This made the 18.79% sequential decline in net profit sharper than the 2.54% rise in operating profit.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,738 cr | ₹2,644 cr | +3.53% | +14.75% |
| Other income | ₹-29 cr | ₹77 cr | — | — |
| Expenses | ₹621 cr | ₹580 cr | +7.08% | +20.70% |
| Operating profit | ₹2,116 cr | ₹2,064 cr | +2.54% | +13.11% |
| Operating margin (%) | 77.31% | 78.06% | — | — |
| Interest | ₹1,314 cr | ₹1,247 cr | +5.42% | +11.74% |
| Depreciation | ₹69 cr | ₹60 cr | +15.35% | +14.49% |
| Profit before tax | ₹705 cr | ₹835 cr | -15.53% | +8.92% |
| Tax | ₹188 cr | ₹198 cr | -5.08% | +18.34% |
| Net profit | ₹517 cr | ₹636 cr | -18.79% | +5.85% |
| EPS (₹) | ₹46.88 | ₹57.71 | -18.77% | +5.85% |
Operating margin of 77.31% compares with a Financial Services sector median of 51.66% across 93 peers that have reported Q2FY27.
What to watch
- Whether operating margin stabilises above 77.31% after three consecutive quarterly declines.
- Whether expense growth falls below the 20.70% year-on-year rate recorded in Q2FY27.
- Whether the tax rate moves down from 26.71% and other income returns from negative Rs 28.79 cr.