Cholamandalam Investment - Strong Franchise But Diminishing Margin Of Safety: HDFC Securities

"NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.Cholamandalam Investment and Finance Company Ltd. exposure to unsecured retail credit through FinTech partnerships is low (~1.8% of assets under management as of September-2023) and poses limited downside risk on account of the underlying customer profile and partnership dynamics. Chola’s core businesses (vehicle, loan against property and home loans) have delivered steady outcomes on growth as well as profitability parameters.With an increasingly diversified portfolio, we expect Cholamandalam to deliver steady loan growth (greater then 20%) and profitability (return on equity of greater then 20%) in the medium-term, with the recent equity raise to support loan growth.However, having outperformed Bank Nifty by 60% during CY23, we believe that current valuations (5.1 times March-25 adjusted book value per share) offer limited margin of safety. We downgrade Cholamandalam from 'Buy' to 'Add' with a revised RI-based target price of Rs 1280 (earlier Rs 1315) implying 4.6 times September-2025 adjusted book value per share (~15% discount to Bajaj Finance Ltd.). We factor in AUM compound annual growth rate of ~24% during FY23-FY26..Click on the attachment to read the full report:.Sensex, Nifty End Higher Even As Financial Services Stocks Fall: Market Wrap.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner."

Cholamandalam Investment - Strong Franchise But Diminishing Margin Of Safety: HDFC Securities

Limited STPL exposure; focus on select FinTech partnerships

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Limited STPL exposure; focus on select FinTech partnerships

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