Cholamandalam Investment Q3 Results Review - Robust AUM Growth Sustained; NIMs Stable: IDBI Capital

IDBI Capital Report

Cholamandalam Investment and Finance Company Ltd.'s sustained robust assets under management growth (at 40% YoY) backed by 40% YoY (9M FY24) growth in disbursements. Management remains optimistic on strong AUM growth going forward albeit growth moderating slightly for next few quarters.

Net interest margin remain stable QoQ despite cost of funds rose. We expect benefit of lower interest rate environment on account of fixed rate vehicle finance book. Asset quality improved with GS3 at 2.82% versus 2.96% led by higher write-off.

Net interest income grew by 10% QoQ; however pre-provision operating profit grew by 6% QoQ led by higher operating expenses (up 20% QoQ). Profit after tax grew by 5% QoQ led by increase in provisions (up 7% QoQ). We have moved to FY26E and included Rs 20 billion (conversion of non-convertible debentures into Equity).

We upgrade to “Buy” from “Hold” with a new target price of Rs.1,450 (earlier Rs.1,150) based on price/book value of 4.1 times FY26E as growth prospects remain strong.

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