Financial statement analysis Mahindra vs sundaram finance

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

11.  Calculations were made using data from Bloomberg
 All relevant Excel sheets are attached below: