Equal Weight on Cholamandalam Investment & Finance, target price Rs 1,650: Axis Securities

Axis Securities has an equal weight call on Cholamandalam Investment & Finance Company with a target price of Rs 1650. The current market price of Cholamandalam Investment is Rs 1465.9.

Cholamandalam Investment & Finance, incorporated in 1978, is a Large Cap company with a market cap of Rs 122829.71 crore, operating in the NBFC sector.

Cholamandalam Investment's key products/revenue Segments include Interest, Fees & Commission Income, Income From Sale Of Share & Securities and Sale of services for the year ending 31-Mar-2024.


Financials
For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 6836.76 crore, up 8.14 % from last quarter Total Income of Rs 6322.34 crore and up 35.25 % from last year same quarter Total Income of Rs 5054.76 crore. The company has reported net profit after tax of Rs 1087.14 crore in latest quarter.

The company's top management includes Mr.Vellayan Subbiah, Mr.Ravindra Kumar Kundu, Mr.M A M Arunachalam, Mr.N Ramesh Rajan, Mr.M R Kumar, Ms.Bhama Krishnamurthy, Mr.Anand Kumar. Company has S R Batliboi & Associates LLP as its auditors. As on 31-12-2024, the company has a total of 84 crore shares outstanding.

Investment Rational
Cholamandalam Investment & Finance Company is poised to sustain strong growth, with AUM/NII/Earnings expected to grow at 27/27/28% CAGR over FY25-27E. The company is well-positioned to maintain a healthy RoA/RoE of 2.3-2.4%/19-22% over the same period, driven by robust disbursement trends, improving asset quality, and a well-diversified portfolio. The key risks: a) Moderation in growth momentum, b) Inability to scale up new products, and c) Asset quality concerns cropping out.

Promoter/FII Holdings
Promoters held 49.93 per cent stake in the company as of 31-Dec-2024, while FIIs owned 27.43 per cent, DIIs 16.09 per cent.