Cholamandalam Investment Q1 Results Review - AUM Growth Guidance At 25%-30% For Long Term: IDBI Capital

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IDBI Capital Report

Cholamandalam Investment and Finance Company Ltd. sustained robust assets under management growth (at 35% YoY) backed by 22% YoY (Q1 FY25) growth in disbursements. Management guided for 25-30% AUM growth led by 20-25% disbursement growth for longer term.

Cholamandalam net interest margin improved by 30 basis points YoY backed by improvement in yields. We expect benefit of lower interest rate environment on account of fixed rate VF book. Asset quality deteriorated due to seasonality with gross stage-III at 2.62% versus 2.48%.

Net interest income grew by 48% YoY; however pre-provision operating profit grew by 7% QoQ led by higher operating expenses (up 21% QoQ). PAT grew by 38% YoY led by lower other income (down 57% YoY).

We have revised estimates upwards by 6% EPS FY26E backed by strong AUM growth.

We maintain “Buy” with a new target price of Rs 1,632 (earlier Rs 1,480) based on price/book value of 4.5 times (earlier 4.2 times) FY26E as growth prospects remain strong.

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