Hold Cholamandalam Finance: target of Rs 1430: ICICI Securities

ICICI Securities's research report on Cholamandalam Finance

Cholamandalam Finance (Chola) sustains robust Q1FY26 performance with PAT growth at 21% YoY, RoA at 2.2% and RoE at 19%. However, 8% QoQ decline in disbursements resulted in AUM growth decelerating to 24% YoY from 27%/31%/33%/35%/37%/40% YoY in Q4/Q3/Q2/Q1FY25/Q4-Q3FY24, respectively. Yet, the same is still within the guided range of 20-25% growth in near term. Management is cognisant of the stress in unsecured segment (proactively pruned disbursements in CSEL segment - 7% of AUM) and slowdown in VF segment. Share of CSEL in overall disbursement fell to 8% in Q1 vs. 14% YoY. While Chola highlighted it would calibrate AUM growth in the near term and prioritise collections, it sounded confident of delivering 20% growth in FY26.

Outlook

We cut FY26/FY27E earnings by 5%/1% respectively. Maintain HOLD with a revised TP of INR 1,430 (INR 1,500 earlier), valuing the stock at 3.75x Sep’26E BVPS.