Cholamandalam Investment & Finance Company Ltd. share price target

Company is a diversified NBFC with focus on vehicle and home financing. A rare combination of credit quality, growth, margins and return ratios are reasons to recommend to long term investors.

To maintain 20% growth in balance sheet, with higher focus on LCV, Home loan and MSME.GrowthinHCVhascomeoffslightlyinthisquarter. 9 Usedvehiclesegmentequallysplitbetween34yearsand47yearscategory.WithNGT lookingtobanvehiclespost10yearsvintageinDelhi,demandforusedvehiclesin47 yearscategorymightseesubstantialincrease....

CIFCs 1Q earnings were a mixed bag. Its Vehicle Finance (VF) segment continues to deliver strong performance across parameters - disbursements ( 29%), AUM ( 17%), GNPAs (-3% QoQ, despite a seasonally weak quarter) and pre-tax RoA of 3.1% (highest in 12 quarters).

9 CIFC reported strong numbers with NII/PAT at Rs 6.0/1.92bn aided by higher disbursementgrowthandimprovementinNIMs. 9 Disbursement growth further accelerated to 47% yoy, aided by continued strength in...

Result Highlights: Above est; Acceleration in AUM growth & low OPEX leads to strong beat in profits (+42% YoY); Strong disbursement growth of 41% Chola's Net Income grew by 33% to INR 602cr backed by AUM growth of 17% to INR 29,815cr and 150bp expansion...

It was yet another strong quarter for CIFC, with disbursements (across segments) and AUM growth (17%) hitting a 15- and seven-quarter high. A 45bps NIM improvement and controlled opex (10% YoY) made way for 25bps QoQ decline in C-AA to 2.9%. Despite Rs 540-mn provision towards the 90DPD shift, net earnings were 23% ahead of estimates. Asset quality, too, improved QoQ led by better recoveries.

Strong growth in disbursements contributed to CIFCs 3QFY16 performance. Led by vehicle finance (VF) and steady growth in home equity (HE), disbursements growth hit a 14-quarter high at ~38%. NIM, too, improved 25bps QoQ to 7.85% with a sharp decline in CoF. Opex growth was moderate (9%) leading to a stable C-AA at ~3.1%. With no major surprises in asset quality, PCR nudged up ~530bps QoQ to 35%.

9 CIFC reported strong numbers with NII/PAT at Rs 5.4/1.5bn aided by sharp pick up in disbursementsandsignificantimprovementinNIMs. 9 Disbursement growth accelerated to 38% yoy, aided by continued strength in MHCV...

CIFCs 2Q results beat estimates despite the shift to 120DPD ? six quarters ahead of the regulatory deadline. This impacted profits by Rs 536mn (44% of reported PAT) and added Rs 2.7bn (~1%) to GNPA.

Over FY11-15, the Chennai-based Murugappa groups Cholamandalam Investment (CIFC) diligently built national reach, scale and process quality in its CV finance and home equity (LAP) business. Notably, CIFC improved costs even as macros and asset quality slipped. As India readies for a saucer-shaped macro recovery, we see a sweet spot emerging with scale and spread benefits for CIFC. Valuations, though, are not cheap at 2.84x FY17E ABV.