Cholamandalam Investment & Finance Company Ltd. share price forecast

CIFC PAT grew by 28% YoY led by 26% YoY growth in operating profit. NII grew by 24% YoY despite NIM pressure during the quarter. Elevated credit cost drags the earnings however it is seasonal in nature.

Godrej Properties: Godrej Properties Ltd (GPL) reported subdued presales worth INR 22.5bn (-11/-44% YoY/QoQ), with a booking area of 2.3msf (-21/-57% YoY) with sustenance sales contributing 80%. The price realisation, however, was healthy at INR 10,018psf (+12.5%/+30% YoY/QoQ). It reiterated its target of achieving INR 140bn of presales in FY24, with 20msf of launches planned (1.09msf launched in Q1FY24). GPL added four new projects with a gross development value of INR 64.5bn in Q1FY24. The implied realisation of these new projects is INR 17,671psf. Net debt as a result of higher BD activity increased significantly to INR 53bn (INR 36.5bn in Mar'23), exacerbated by a lower collection of INR 19.5bn (+26/-48% YoY/QoQ), which in turn was low because of subdued launches during the quarter. The total GDV addition target for FY24 is INR 150bn to be funded through improving cash flow as launches pick up and there is more available headroom to increase its net D/E to 0.5x-1x. We reiterate ADD with a higher SOTP valuation of INR 1,664/sh (to account for higher BD activity and improving price realisation 5-10% more than the estimate). ACC: We maintain BUY on ACC, with a revised TP of INR 2,325/share (11x its Mar-25E consolidated EBITDA). It reported strong 23% YoY volume growth. Cement opex fell by 8% QoQ owing to a cool-off in input cost and lower fixed expense its benefit was partially offset by a 2% dip in realisation. Thus, unit EBITDA recovered INR 270/MT each QoQ/YoY to INR 811/MT. The long-pending Ametha integrated plant is expected in...

We maintain our BUY rating on the stock and value CIFC at 5.7x FY25E ABV to arrive at a target price of Rs 1,250/share, implying an upside of 14% from the CMP. The premium valuations reflect the superior performance delivery potential by CIFC.

Superb growth yet again; operationally shaky

CIFC surprised yet again on bottomline aided by an in-line performance in disbursals and AUM growth and a stronger earnings performance driven by a sharply lower provisions (28% QoQ decline vs. 50% increase est.) This led to the strong net profit beat. The company management sounded optimistic on delivering growth, especially the new products, which are expected to keep momentum intact in the likelihood of a VF segment slowdown.

Superb disbursement streak continues

CIFC reported strong disbursement growth of 65.3% YoY/ 19.7% QoQ at INR 210.2 Bn. For FY23, the disbursements stood at INR 665.32 Bn, a jump of 87.5% YoY driven by robust disbursals across all the segments.

TVS Motor: TVS Motors' Q4 adjusted PAT at INR 3.64bn came ahead of our estimate of INR 3.3bn, led by the better-than-expected margin. TVS was able to improve margin QoQ despite the ramp-up of iQube in the quarter and that is commendable. TVS continued to outperform peers even in FY23: (1) it gained a 100bps market share in motorcycles to touch a record-high level of 8.9% (2) in scooters, it is the biggest gainer and its market share is up 220bps to 23.6% (3) even in 2W EVs, TVS has now emerged as the second-largest player and sold 97k units of iQube in FY23. With supply challenges now largely over, we expect TVS' outperformance to continue on the back of the ramp-up of its launches, including the new Ronin and Raider. Even in EVs, it seems to be ahead of its listed peers with a strong product pipeline in place for the next 24 months it has signed up with industry experts and JV partners to emerge as a leading player in EVs. We maintain BUY with a revised TP of INR 1,342/sh (earlier INR 1275), as we roll forward to FY25 EPS (target multiple unchanged at 28x). KEC International: KEC reported Q4FY23 numbers with a slight recovery in the consolidated margins. However, the standalone margin continues to be at multi-year low levels. With FY23 order inflow (OI) of INR 223.8bn (vs. revised guidance of INR 180-190bn) and L1 on INR 35bn, the order book (OB) as of Mar'23 stood at INR 340bn (~2x FY23 revenue)....

We maintain our BUY' rating on the stock and value CIFC at 5.1x Sep'24E ABV to arrive at a target price of Rs 1,075/share, implying an upside of 13% from the CMP. The premium valuations reflect the superior performance delivery potential by CIFC.

Cholamandalam Investment and Finance (Chola) has in the past stood out among peers in terms of business performance across cycles. The most prominent driver for that outperformance was the ability to grow most in a CV upcycle (26% vehicle AUM CAGR during FY16-FY19 vs 13% / 17% / 17% for Shriram Finance / MMFSL / Sundaram, respectively) and it has yet again done the same in FY23 (27% for Chola vs 15% / 23% / 22% for Shriram Finance / MMFSL / Sundaram).

CIFC reported a strong 31% YoY net profit growth driven by a healthy expansion in net income and a sharp, 36% YoY decline in credit costs. The business momentum continued in a robust trajectory with the AUM increasing 31% YoY with a continued show of strong contribution from new businesses to the incremental growth as well as market share gains in the traditional segments. The management commentary was positive highlighting improving structural growth factors, especially in the vehicle finance segment.

NII for Q3FY23 stood at INR 15,983 Mn, a growth of 17.2% YoY (+7.4% QoQ). The Pre-Provision profit was at INR 10,797 Mn against INR 9,525 Mn in Q3FY22, an increase of 13.4%. Profit after Tax (PAT) for Q3FY23 was at INR 6,843 Mn agaito INR 5,238 Mn in Q3FY22, reporting a growth of 30.6% YoY/ 21.5% QoQ.

Jubilant FoodWorks: Jubilant's Q3 performance was a miss on all fronts. Revenue and LFL YoY growth was at 10% and 0.3% vs. the expectation of 12% and 4.5%. We were building up a weak consumption trend, but it came sharper than expected. GM was down 200/78bps YoY/QoQ to 75.5% (coming off from 78% in FY21). Inflationary headwinds with weaker offtake have been pressurising the margin. Furthermore, EBITDA margin was impacted by operating deleverage, resulting in a decline of 450/230bps YoY/QoQ to 22% (lowest of the last 10 quarters). Jubilant is trying to address the challenges by introduced entry level menu at INR 49 to drive footfalls in dine-in. It is also to counter the competition that has been aggressive at the entry level. We believe the EBITDA margin will remain under pressure, owing to (1) RM headwinds, (2) slower consumption trend not offering price actions, (3) faster store opening that would impact unit economics. We cut our EPS estimate by 12% for FY23-25. Our target price is INR 475 (INR 450 for Domino's at 45x P/E on Dec-24E EPS + INR 25 for other initiatives). We maintain REDUCE. KEC International: KEC reported a weak quarter, with consolidated/standalone margins at multi-year low levels. Revenue: at INR 43.7bn, driven by T&D segments. EBITDA: INR 2bn (-16.4/+12.3% YoY/QoQ, a miss of 4.2%, owing to higher input prices; partly offset by better absorption of overheads and lower employee benefit expenses). EBITDA margin: 4.6% (-259/+19bps YoY/QoQ, vs. our estimate of 5.2%). APAT: INR 176mn (-81.2/-10.5% YoY/QoQ, a 40.2% miss owing to...

Strong AUM growth (9% QoQ), largely stable NIMs (~7%) in rising interest rate environment, and improved asset quality (gross stage-3 assets (GS-3) of 3.5% vs 3.8% in Q2FY23) sum up a very strong Q3FY23 for Cholamandalam Investment and Finance (Chola). Consequently, PPOP grew 4% QoQ despite 14% QoQ increase in opex while lower credit cost led to 22% QoQ growth in PAT.