Sharekhan has given Buy recommendation for Cholamandalam Investment and Finance Company with a target price of Rs. 520 in its research report issued on Feb 01, 2021

Sharekhan’s research report on Cholamandalam Investment and Finance Company

CIFC posted mixed results with a rise in proforma GNPA against reported GNPA levels, but improvement in margins was the bright spot. Healthy business traction seen with total AUM rising 15% y-o-y to Rs 75,813 crore; reported asset quality improved with Stage 3 assets at 2.57% (improved from 2.75% in Q2 FY2021). Buoyancy in rural markets augurs well, a well-capitalised balance sheet, and rigorous risk management practices provides long-term visibility; the stock is available at 4.1x/3.4x its FY2022E/FY2023E ABVPS.

Outlook

Healthy traction in automobile demand, resilient rural economy brighten growth outlook; we maintain Buy rating with an unchanged price target (PT) of Rs. 520.

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