Often labelled conservative, Sundaram Finance wears that tag with pride. “We’re mara thon runners,” said Lochan, neatly summing up the company’s ethos of long-term thinking. While others sprint, Sundaram moves with deliberate intent quietly resilient in a noisy, fast moving financial world.
PLANNING IN DECADES, NOT QUARTERS
With its 75th anniversary closely paralleling India’s post-independence trajectory, the Chennai-headquartered non-banking financial company (NBFC) remains focused not on short term spikes, but on a future that spans decades. “We plan in 20-, 30-, even 40-year cycles,” he explained, noting how earlier disruptions, from GST reforms and COVID-19 to the taper tantrums briefly slowed their plans. Now, they are picking up where they left off, with steady, deliberate steps into the future. This long-horizon approach puts Sundaram in stark contrast with some of its high-growth peers, such as Murugappa Group NBFC. “Cholamandalam has com pounded at over 30 per cent for a decade with strong execution. Credit to them. But that’s not who we are,” Lochan explained. Instead of rushing into unsecured lending or consumer financing, like many leading NBFCs, Sundaram remains focused on financing productive assets like commercial vehicles, passenger cars, and tractors that help build livelihoods. “Consumption finance and unsecured lending are still quite a distance away for us,” he added.
SLOW AND STEADY, BUT STRONG NUMBERS
Sundaram’s numbers tell a steady story. The company has recorded 18 – 25 per cent annual AUM growth in recent years, with profits growing at an even slightly faster pace. “That tells us we are pricing right, managing risk well and growing prudently,” pointed Lochan. Key to this has been frugality and control. “Our cost-to income ratio is the lowest among peers, and in FY25, our cost-to-income ratio improved from 34 per cent to 30 per cent. Our credit costs are also the lowest. We borrow at the lowest rates among AAA-rated NBFCs. It’s about driving efficiencies, not chasing volume for the sake,” he explained.
COST LEADERSHIP
Over the past year, the company has mai tained best-in-class pricing across nearly all instruments. It has expanded relationships with lenders and leveraged this to secure funding through innovative structures. “For instance, in securitisation, our team has taken a granular view within priority sector lending (PSL) categories like MSME and agriculture,” highlighted Lochan. By identifying sub-segments and targeting mar ginal cost efficiencies, considerable savings have been achieved helping to manage overall fund ing costs. Even their customer metrics reflect a unique positioning. While a Mumbai-based lead ing NBFC boasts 8 crore customers, Sundaram serves just around 6 lakh, yet with a higher aver age loan size of Rs 10 lakh. “Their average is Rs 50,000 to Rs 1 lakh. Ours is significantly higher because we finance larger assets, and the transaction frequency is lower,” pointed Lochan.
MARKET SHARE GAINS
FY25 has brought solid market share gains across asset classes for the company. While 25 per cent growth was registered in two consecutive post- covid years, Lochan attributes much of it to a rebound from a low base. Still, Sundaram gained 1 percentage point in total market share, with some segments nearing double digits. In passenger vehicles, it added 25 ba sis points in core markets. Of the 4.3 million cars sold nationwide, over 3.5 million were within Sundaram’s operating zones. Despite a 10 – 11 per cent decline in the heavy and medium CV sector, the company still expanded its share, a testament to strong execution. Conversely, it intentionally ceded market share in small CVs, citing oversupply and declining asset quality. Focus has now shifted to electric and CNG vehicles, with a preference for users over market load operators. In tractors, the company held steady despite policy disruptions, particularly subsidy schemes separating borrower and user identities, which led the company to step back from select programmes.
CALIBRATED GROWTH
Looking ahead, the target is sustainable 15 – 20 per cent annual growth. The exceptional pace of recent years is moderating, partly due to macroeconomic uncertainty and the general elections. “This year’s softer growth is externally driven,” pointed Lochan. Sundaram’s growth strategy remains future-focused, with key segments continuing to play a central role. In the commercial vehicles sector, the company is targeting deeper market penetration, while in the passenger car segment, it aims to build on its existing foothold. The tractor segment is also well positioned for growth, supported by improvements in credit avail ability, branch expansion and talent infrastructure. At the same time, Sundaram’s non-wheel business, which be gan scaling up around five to six years ago, now accounts for 8 – 9 per cent of the company’s Assets Under Management (AUM). The company intends to push this contribution into double digits. This vertical includes SME lending which provides secured loans for machinery or property; supply chain financing, offering working capital solutions for distributors and dealers; and leasing services that cover a range of assets from passenger cars to IT equipment and construction machinery.
DEPOSITS BUILT ON TRUST, NOT NOISE
Despite a challenging environment for banks, the company delivered a strong performance in deposit mobilisation. It raised over Rs 1000 crore in gross de posits, with net inflows totaling around Rs 570 crore. Renewal rates remained robust at 85 – 86 per cent, aligning with historical trends. During this period, the company reduced its deposit rates by 25 basis points. While several banks implemented even steeper rate cuts, this move enhanced the company’s relative attractiveness as an AAA-rated NBFC. Notably, the company does not rely on advertising, brokerage payments, or offering inflated interest rates to attract deposits. Instead, its growth in deposits is attributed to a strong reputation and the convenience of its technology enabled services. These include fully digital solutions for online renewals, new deposit placements, and submissions of Forms 15G and 15H.
EXPANDING NORTHWARD
Strong in south India, Sundaram is now eyeing deeper footprints in the north. “We’ve been in Maharashtra for decades, but our network there is smaller than in Madhya Pradesh. Karnataka is also underpenetrated,” Lochan admitted. The strategy: grow within familiar territo ries. For instance, Tamil Nadu has 120 branches; Despite a challenging environment for banks, Sundaram Finance delivered a strong performance in deposit mobilisation. It raised over Rs 1000 crore in gross deposits, with net inflows totaling around Rs 570 crore. In FY26, around 75 new branches are planned, more than half will be in the north, potentially tipping the balance to a pan-India presence. Over 50 per cent of its current vehicle finance customers already come from northern states! Karnataka only 55. That gap is closing. In FY26, around 75 new branches are planned, more than half will be in the north, potentially tipping the balance to a pan-India presence. Over 50 per cent of its current vehicle finance customers already come from northern states!
GROWTH LEVERS
Sundaram Finance’s layered growth strategy is designed to push towards the higher end of its 15 – 20 per cent growth target, driven by three key levers: productivity, geography and diversification. Productivity gains are being achieved through the use of technology and analytics to optimise operations. Geographically, the company is focused on expanding and deepening its existing branch networks. On the diversification front, Sundaram is scaling up verticals such as SME lending and leasing to broaden its business base. The company’s branches are intentionally lean, operating with only about a third of the staff typically seen at other NBFCs. This structure allows Sundaram to absorb rising demand with minimal cost increases, enhancing scalability. While FY25 was challenged by factors like muted urban demand, policy uncertainty and modest wage growth, FY26 looks more promising. Anticipated tax changes are expected to spur consumer spending later in the year, especially during the festive season. Certain sectors, such as consumer durables, continue to show weakness, and states like Pun jab and Kerala are grappling with fiscal pressures. Political transitions in some regions have also led to payment delays. However, Sundaram views these as temporary setbacks. Disruptive events like Operation Sindoor caused only brief interruptions, and states like West Bengal and Odisha have remained relatively stable.
AI AS A CO-PILOT, NOT A REPLACEMENT
For over 7 years at Sundaram Finance, base-level repetitive jobs have been automated using robotic process automation, yet the headcount has increased as the business has grown. Employees adapt and upskill to changing times and the evolution of roles has not led to a decline in overall employment. “AI is seen as a complement. It has delivered direct benefits in areas like underwriting and pricing. Machine learning models assess customer risk and recommend optimal pricing, while propensity models identify cross-sell opportunities among existing customers,” pointed Lochan. In collections, AI differentiates risk even within the same asset class, allowing for more targeted follow-up. Most significantly, over the past 12 to 18 months, AI has helped digitise and streamline workflows across the company, contributing to overall operational efficiency. In a volatile macro environment shaped by geopolitics, policy transitions, and uneven consumption trends, Lochan said Sundaram Finance remains confident about playing the long game. Its expansion is deliberate, underwriting cautious and ambition calibrated.