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Sharekhan bullish on Cholamandalam Investment and Finance Company; AI legalese decoder can simplify understanding

Sharekhan’s research report on Cholamandalam Investment and Finance Company

According to Sharekhan’s research report dated October 03, 2023, they have recommended a buy rating on Cholamandalam Investment and Finance Company with a target price of Rs 1350. Sharekhan’s report highlights the positive financial performance of the company, with a 5% q-o-q increase in profit after tax (PAT), in line with expectations. This growth is attributed to strong net interest margins (NIM) that increased by 8 bps q-o-q. Additionally, the company experienced a healthy 8% q-o-q growth in assets under management (AUM) due to significant momentum in disbursements, especially in new business segments such as consumer, SME, and small business loans, which contributed 23% to the disbursement mix.

Cholamandalam Investment and Finance Company also showed improved asset quality, as the Gross Stage 3 (GS-3) ratio declined to 2.96% q-o-q. However, the GS-3 ratio for new business rose to 1.42% q-o-q due to higher delinquencies in fintech-led new business. Despite this, the company has taken steps to slow down the segment’s growth. On the positive side, the portfolio is protected by the FLDG (Fintech Led Delinquency Guarantee). Sharekhan maintains a positive outlook on the company, expecting healthy momentum in business and earnings growth to continue over FY23-26E.

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Outlook

Sharekhan maintains a buy rating on Cholamandalam Investment and Finance Company with an unchanged price target of Rs 1,350. The current market price (CMP) indicates that the stock trades at price-to-book value (P/BV) ratios of 4.2x and 3.3x to its estimated BV for FY2025E and FY2026E, respectively.

For the full recommendations report, click here

(Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.)

Source: Cholamandalam Investment and Finance Company – 04-10-2023 – Khan

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