Dolat Capital recommended accumulate rating on Cholamandalam Investment and Finance with a target price of Rs 1360 in its research report dated January 31, 2019.
Dolat Capital's research report on Cholamandalam Investment and Finance
In our visit note dated 24th Dec 2018, we were confident of a strong performance, even in the crisis. It reported an even better performance. Disbursements grew 13% YoY with vehicles growing 11% YoY, and LAP 18% YoY. A 34% YoY growth in vehicles and a 14% growth in LAP aided a 32% YoY growth in AUM. The negative carry on upfront lines drawn (` 5000 mn) let NIMs down, but we are not perturbed. We have factored a 20% growth in AUM, dragged by weaker demand sentiment in its largest contributing CV business, despite its strong market position.
Outlook
We have also factored a marginal decline in NIMs in FY21 as competitive intensity erode pricing premium in used-vehicles. Maintain Accumulate at a lower multiple.
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