Buy Cholamandalam Investment and Finance Company; target of Rs 1600: Sharekhan

Sharekhan is bullish on Cholamandalam Investment and Finance Company has recommended buy rating on the stock with a target price of Rs 1600 in its research report dated November 04, 2024.

Broker Research

January 31, 2025 / 15:45 IST

Buy

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bselive
nselive

Volume

Todays L/H

Sharekhan's research report on Cholamandalam Investment and Finance Company

CIFC reported net earnings of Rs. 963 crore, 3.5% (up 26.3%/2.2%, y-o-y/q-o-q) below estimates due to higher credit cost. Core PBT grew by 27.5% y-o-y/3.5% q-o-q, driven by AUM/NII growth. NIM, at 6.59% up 10 bps y-o-y, was in line with estimates. AUM growth stood at 32.5% y-o-y/5.9% q-o-q, driven by growth in disbursement (13%); within this LAP, home loans and CSEL segments performed well, while vehicle finance witnessed weak demand due to extended/heavy rainfall. Annualised credit cost stood at 1.51%, up 5 bps, due to stress in vehicle finance and delayed payments because of extended rainfall. GS-3 increased to 2.83%, up 21 bps y-o-y. PBT-ROA at 3.1% in H12025.

Outlook

We maintain BUY with a revised PT of Rs. 1,600 due to improvement in PBT-ROTA to 3.2-3.3% for FY2025 due to reduction in credit cost, improvement in asset quality, higher NIM, and healthy AUM growth of 25%. The stock trades at 4.3x/3.5x/2.7x its FY2025E/FY2026E/FY2027E BV estimates.

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