Neutral Cholamandalam Investment and Finance; target of Rs 1770: Motilal Oswal

Neutral

Motilal Oswal's research report on Cholamandalam Investment and Finance

Cholamandalam Inv. & Finance’s (CIFC) 4QFY25 PAT grew ~20% YoY to INR12.7b (in line). FY25 PAT grew ~24% YoY to INR42.6b. 4Q NII grew ~30% YoY to ~INR30.6b (in line). Other income grew ~26% YoY to ~INR7b (~9% beat), primarily driven by an upfront assignment income of ~INR940m. Opex rose ~11% YoY to ~INR14.3b (~9% lower than MOFSLe) and the costincome ratio declined ~2pp QoQ to ~38% (PQ: ~40% and PY: ~44%). PPoP grew ~43% YoY to INR23.3b (~7% beat). Management guided for an opex-toassets ratio of ~3.0%-3.1% in FY26, given that the opex will remain elevated, driven by investments in branch expansions of the gold loan business. Yields (calc.) declined ~15bp QoQ to ~14.5%, while CoF (calc.) declined ~20bp QoQ to ~7.9%. NIM was stable QoQ at ~6.8%.

Outlook

CIFC will have to utilize its levers on NIM (and fee income) to offset the impact of moderation in AUM growth and elevated opex/credit costs. We estimate RoA/RoE of ~2.7%/21% in FY27. Reiterate BUY with a TP of INR 1,770 (premised on 4x Mar’27E BVPS).

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Cholamandalam Inv Finance - 29042025 - moti