Here's why Cholamandalam Investment shares jumped over 9% today

Shares of Cholamandalam Investment and Finance Company Limited (CIFC) zoomed over 9 per cent to hit an all-time high of Rs 751 on BSE after the company posted its business updates for the quarter ended March 2022.

The stock opened 3.5 per cent higher at Rs 711.10 against the previous close of Rs 686.95. With a market capitalisation of more than Rs 60,000 crore, the shares stand higher than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.

Long-term investors have made big gains by investing in this stock as it has zoomed around 2000 per cent in the last ten years.

The company informed that disbursements for Q4 FY 22 stood approximately at Rs 12,718 crore as against Rs 8071 crore in Q4 of FY 21 which is a growth of 58 per cent and for FY 22 stood approximately at Rs 35,489 crore as against Rs 26,043 crore which is a growth of 36 per cent.

Disbursements in Vehicle Finance business grew by 43 per cent to approximately Rs 8785 crore in Q4 of FY 22 and by 26 per cent in FY 22 to approximately Rs 25,439 crore. Loan Against Property business grew disbursements by 57 per cent to approximately Rs 1870 crore in Q4 of FY 22 and by 53 per cent to approximately Rs 5536 crore in FY 22.

Brokerage house Motilal Oswal said that CIFC is well-diversified across product segments as well as geographies. It has delivered the best asset quality among peers across credit cycles as well as in times when the external environment has been tough. We expect credit costs to moderate to 100-110bp (of average AUM), with 19% loan CAGR over the next two years, it said.

"We have always felt very strongly about CIFC as a franchise, owing to its ability to play different credit cycles better than its peers. Time and again, we have reiterated the strength of this franchise. Strong disbursements in 4QFY22 and healthy collection efficiencies vindicate our stance that CIFC is among those few NBFCs which are best positioned to demonstrate high loan growth as well as pristine asset quality (COVID stress notwithstanding)," it added.

"It can deliver 3 per cent return on asset (RoA) and 20 per cent return on equity (RoE) from FY23E onwards. The stock trades at 4.1x FY23E P/BV and 22x P/E. We maintain our 'Buy' rating with a target price of Rs 850 per share," the brokerage said in its recent report.