HDFC Securities's research report on Cholamandalam Investment & Finance
CIFC’s business momentum sustained through 1Q even though reporting changes (under IND AS) created some ambiguity. Disbursement growth (+45% YoY) continued to dazzle, with VF leading the way. Though a higher share of lower-yielding HCV business (18% of VF disbursements vs. 11% YoY) dented margins partially, the 47bps dip could largely be attributed to the IND AS shift. Management’s attribution of lower costs to increasing oplev (~50bps improvement) was a key positive.
We remain constructive despite rich valuations, as best-in-class return ratios will continue to inch up (14bps over FY18-20E). Maintain BUY with a TP of Rs 1,764 (4x Mar-20 ABV of Rs 441).
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