Sharekhan's research report on Cholamandalam Investment and Finance Company
We continue to see strong outperformance in Cholamandalam Finance, led by a robust show put up by existing businesses, while new businesses get scaled up. The company has guided for a 20-25% AUM growth in FY2024E, with the new businesses and home loans growing faster than the vehicle finance business.. The company expects an additional 30-40 bps rise in cost of funds vs Q4FY23, however it would be fully offset by incrementally higher disbursement yields. Thus, the management endeavors to maintain NIMs at FY23 exit levels. We believe that the margin trajectory could surprise positively offsetting marginally higher COF led by higher yields on new fixed rate vehicle loans, mix shift to used/high-yielding vehicles from new HCVs funding and increase share of high-yielding small business loans.
Outlook
At CMP, the stock trades at 5.5x/5.0x its FY2024E/FY2025E ABV, respectively. We reiterate Buy with a revised PT of Rs. 1,350.
For all 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.
Cholamandalam Investment and Finance Company - 22 -06 - 2023 - khan