Buy Cholamandalam Investment & Finance Company, target price Rs 743: ICICI Securities

ICICI Securities has buy call on Cholamandalam Investment & Finance Company with a target price of Rs 743. The current market price of Cholamandalam Investment & Finance Company is Rs 630.05. Time period given by analyst is one year when Cholamandalam Investment & Finance Company Ltd. price can reach defined target.

Cholamandalam Investment & Finance Company Ltd., incorporated in the year 1978, is a Large Cap company (having a market cap of Rs 51522.26 Crore) operating in NBFC sector.

Cholamandalam Investment & Finance Company Ltd. key Products/Revenue Segments include Interest, Fees & Commission Income, Sale of services and Income From Sale Of Share & Securities for the year ending 31-Mar-2021.



Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 2656.63 Crore, up 3.88 % from last quarter Total Income of Rs 2557.46 Crore and up 7.13 % from last year same quarter Total Income of Rs 2479.80 Crore. Company reported net profit after tax of Rs 691.57 Crore in latest quarter.

Investment Rationale
The brokerage estimates 24% AUM CAGR with overall RoA/RoE of 2.6/18.3% in FY23E and 2.7/20.2% in FY24E leading to standalone PAT of Rs23.4bn/30.6bn in the two respective years. It maintains BUY with a target price of Rs743, based on FY24E SoTP valuations of 3.8x P/B for the standalone business, and 1.0x P/B for subsidiaries/JVs (unchanged). Upward revision of our opex estimate leads to 1% decline in FY23E PAT. For FY24E, the brokerage models a marginally higher credit cost to be offset by slightly higher NIMs in line with business mix change.

Promoter/FII Holdings
Promoters held 51.55 per cent stake in the company as of 31-Mar-2022, while FIIs owned 20.03 per cent, DIIs 20.59 per cent.