Axis Direct recommended hold rating on Cholamandalam Investment with a target price of Rs 1075 in its research report dated February 02, 2017.
Axis Direct's research report on Cholamandalam Investment
CIFC’s PAT (Rs 1.6 bn, up 12% YoY) was below our expectation due to one-off expenses (Rs 280 mn) and higher than expected 30% QoQ rise in provisions (RBI forbearance on NPA recognition not taken). Growth in disbursements did take a hit from demonetization (down 30% YoY in Home equity segment and up a paltry 8% in vehicle finance). Consequently, AUM growth moderated to 17% YoY (LAP book flat YoY).
Asset quality deteriorated, with GNPA (%) rising 30bps QoQ to 3.8% led by stress in the vehicle portfolio (esp. tractors). Management stated cash crunch as the main reason for the pressure on GNPAs. Management indicated a slightly tepid outlook on demand as a result of economic disruption in end-customer business models. Maintain HOLD on rich valuations.
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First Published on Feb 3, 2017 01:47 pm