Sharekhan has given Buy recommendation for Cholamandalam Investment and Finance Company with a target price of Rs. 580 in its research report issued on Feb 18, 2021
Sharekhan’s research report on Cholamandalam Investment and Finance Company
Cholamandalam Investment Finance Corporation (CIFC) saw moderate rise in stressed loans; and as the economy picks up and recoveries improve, we expect NIM tailwinds and productivity improvement to drive earnings. CIFC’s well-contained stressed loan is due to its favourable business mix; CIFC has a balanced portfolio with exposure to small CV operators and rural business (less impacted by the lockdown) and home equity segments, which were support factors. At the CMP, the stock is available at 4.9x/4.0x its FY2022E/FY2023E ABVPS, which is reasonable.
We have revised our target multiples considering normalising growth and credit cost scenario; we maintain Buy with a revised PT of Rs. 580.