Prabhudas Lilladher's research report on Cholamandalam Investment and Finance Company
In Q4, Cholamandalam Investment and Finance Company (CIFC) reported AUM growth of 11.6%QoQ/38.5% YoY given strong momentum in new business verticals - up 30% QoQ. Stage-3 asset quality improved at 3.01% vs 3.5% in Q3FY23 (as per RBI norms Stage3 stood at 4.63% vs 5.37% in Q3FY23). Re-rating can happen once asset quality holds up, as the book of new business verticals mature. Maintain ‘HOLD’.
Outlook
We maintain our ‘HOLD’ rating and increase TP to Rs900 (4.4x on Sep’24E PABV) from Rs820 (earlier:4.4x Sep’24E PABV) as we increase our FY24/25E NII estimates by 13.5%/20.8%, given AUM growth of 24% each (from 20% earlier) led by scale-up of new businesses while maintaining strong growth in traditional vehicle finance business.
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