Sundaram Finance reported a 19% year-on-year rise in net profit to Rs 1,834 crore for FY26, driven by the highest disbursements in the company’s 72-year history. In an interaction with Narayanan V, Managing Director Rajiv Lochan discusses the growth drivers, asset diversification plans, and the impact of rising fuel prices on customers. Excerpts:
What drove the record disbursement growth in FY26?
Our disbursements for FY26 grew 14% to ₹32,321 crore and assets under management (AUM) rose 16% to ₹59,908 crore. The first half of last year was largely impacted by tariff and policy-related complications, which resulted in muted industry performance and cash flow pressures for our customers. But after the GST 2.0 reforms were announced in September, economic activity picked up and cash flow pressures eased.
We saw pretty good growth across almost every segment we operate in. Our growth in the first half was only 6%, but for the full year it was 14%. We have also added around 250 branches in last four-five years and about 2,000 employees. This has ensured a steady pace of accretion, and the impact of those investments is beginning to reflect now.
How are you approaching growth in FY27 amid global uncertainties?
If the industry grows at 10-12%, we would expect to grow faster than that. For us, growth is a derived number that we report and not something we chase. Having said that, FY26 closed with the West Asia troubles. The war that broke out in late February has been a cloud over the last couple of months.
We remain very conscious of the risks it presents, particularly through imported inflation. We remain optimistic because India’s macroeconomic fundamentals continue to be strong, supported by resilient domestic consumption, sustained public capital expenditure and a gradual revival in private investment, particularly in sectors like defence, renewables and aerospace. We believe we are well poised for another year of marathon running, balancing growth with asset quality and profitability.
How are rising fuel prices affecting your customers?
Fuel price hikes will compress the viability of our customers because most of them cannot directly pass on higher fuel costs. Freight rates have generally moved much slower than steel or fuel prices in last few years. So, the profit margins of our customers are the first to take a hit. Then, customers who are not well-positioned become more vulnerable. For example, if all vehicles are on lease and viability gets impacted, any disruption can lead to cash flow pressures and repayment stress. At a third level, this could slow fleet expansion and fresh capex. So first, profitability gets impacted. Second, weaker operators become susceptible to cash flow stress and defaults. Third, sentiment towards fleet expansion could weaken.
How is your diversification strategy shaping up?
Our ‘Beyond Wheels’ business now accounts for 15% of our disbursements and has grown well. The tractor business is also making steady progress, with its share inching up marginally. Used assets is another important area of diversification, where we believe we can do much more. Geographic diversification is also gaining traction. During the period, we added around 55-60 branches, and a good portion of them were north of the Vindhyas.
Over the long-term, Beyond Wheels should become a significant part of our business, potentially accounting for a fourth or even a third of overall business. We, now have around 150 people and about 20 branches in this segment. We want to double the branch count this year and eventually scale it to around 100 branches in next few years. We see this as a very important part of our journey in next four-five years.
Do you have plans to enter the gold loan business?
We have evaluated this as part of the Sundaram 75 plan. Today, 97-98% of our book is secured. In last 72 years, our focus has been on supporting small enterprises with productive assets that generate livelihoods. We have not funded consumption so far. Beyond Wheels, we are also looking at entering MSME lending in a meaningful way through machinery and equipment financing, including property-backed financing.
If we stay away from consumption, remain focused on secured lending and continue supporting businesses, then the other categories that open up are gold loans on the secured side or unsecured business loans. 60-65% of the gold loans is not for consumption, it is for business purposes. We are evaluating and will eventually present to the board before sharing plans publicly. We do not see ourselves entering consumption lending in a hurry.