Cholamandalam Investment shares surge over 4% as Goldman Sachs sees 20% upside potential

Shares of Cholamandalam Investment and Finance Company on Thursday surged 4.3% to their new all-time high of Rs 1,549 after the global brokerage firm Goldman Sachs initiated coverage on the stock with a target price of Rs 1,786.

The target price signals an upside potential of 20% from Wednesday’s closing price of Rs 1,485.55.

The global brokerage firm has initiated coverage on Cholamandalam Finance with a buy rating witnessing the company’s market share gains amidst commercial retail up-cycle.


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Structurally, the company displays a better earnings growth story and Goldman Sachs expects Chola to deliver an EPS CAGR of 33% over FY24-FY27 while they also see an improving ROA profile, robust loan growth driven by market share gains.

The company has a capacity in place for new businesses to diversify its loan book and the secured nature of its book also provides high visibility on earnings growth. The operating leverage realization in new businesses can also be seen.

For the quarter ended June 2024, the company had posted a 30% jump in its profit after tax (PAT) at Rs 942 crore on a year-on-year basis while the company’s net interest income (NII) grew by nearly 40% YoY to Rs 2,574 crore.

In the last 2 years, shares of Cholamandalam Investment and Finance have given multibagger returns of 175% while in the last one year, they have gained 81.5%. On a year-to-date basis, the stock has increased by 76.4%.

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