Sharekhan has given Buy recommendation for Cholamandalam Investment and Finance Company with a target price of Rs. 630 in its research report issued on Apr 01, 2021

Sharekhan’s research report on Cholamandalam Investment and Finance Company

Cholamandalam Investment & Finance (CIFC) is well placed to benefit from tailwinds for the vehicle financing business, improving CV traction, and economic recovery. Strong rural demand (aided by good Rabi harvest, expectation of normal monsoon for 2021, and higher cropping among others) will be beneficial for CIFC (80+% branches in the rural and semi urban areas); lower liquidity held on the balance sheet indicates strong growth and margin outlook. Available at 5.2x/4.2x its FY2022E/FY2023E ABVPS, supported by ROEs improving to 19%/20% for FY2022E/FY2023E and improving growth prospects (+25+% AUM growth for the next two years) and lower credit costs.

Outlook

We maintain our Buy rating with a revised price target (PT) of Rs. 630.

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