Cholamandalam Investment & Finance Company Ltd. share price target

Cholamandalam Investment & Finance Co. Ltd. (CIFC) reported higher-than-estimated operational profitability in Q3FY21.

CIFC's gross stage 3 assets increased by 77bps QoQ to 3.75% (adjusted for Supreme Court direction) and it was better than estimate. Also, restructured assets stood at 2% of loan book; lower than guided in the range of 3-5% is the key positive. Further, Covid19 related provisions (Rs.7.5bn as of dec'20) are more than sufficient on the balance sheet and management guided reversal of the same (excluding Rs.3bn for macro). NIMs improved surprisingly by 50bps QoQ led by change in product mix and lower cost of funds. AUM growth remain strong at 13% YoY (13% Q2FY21) led by growth in disbursements (up 6% YoY). NII grew by 26% YoY led by improvement in NIMs; PPoP grew by 51% YoY. We revised the estimates of AUM growth at 13% vs 10% earlier for...

our FY21 still factors sufficient conservatism in the nature of (a) incremental mere 2% AUM growth (but 16% YoY) in Q4FY21 with normalization coming through post festive demand, (b) 4.6% NPA (c) modest margins at (6.6%). CIFC's continued focus on right product positioning and broad-level strategy on creating financing ecosystem make it a constructive long term bet. 2.7% RoA and 17%+ RoE by FY22 only corroborates our confidence in the business model and hence we reiterate BUY recommendation on the stock with...

We upgrade our target multiple to 2.6x (from 1.9x) and revise to Buy from Hold with a target price of Rs 309 (2.6x FY22E ABV).

CIFC's reported higher profitability than expected, led by better AUM growth (13% YoY vs 10%YoY Q1FY21) and improvement in NIMs. NIMs improved surprisingly by 120bps QoQ led by change in product mix and lower cost of funds. As of 28th Oct, 95% of moratorium customers paid at least one EMI, which is positive for asset quality. Asset quality improved with Stage 3 assets declined by 36bps QoQ to 3% led by better collections and recovery. AUM growth bounced back to 13% YoY (10% Q1FY21) led by lower repayments and better disbursements. NII grew by 23% YoY led by improvement in NIMs; PPoP grew by 45% YoY. We revised the estimates of AUM growth at 10% vs 8%...

Cholamandalam Invst. & Finance Company Ltd (CIFC) Q1FY21 earnings performance was better than expectations as provisioning was much lower than estimates accompanied by improvement in cost to income. However, since the morat book tag still remains elevated at ~76%

Cholamandalam Investment and Finance Company (CIFC) is primarily a vehicle financing (VF) non-banking financial company (73% of AUM) with overall assets under management of INR 60,549 crore

Cholamandalam Investment and Finance Company Ltd (CIFC) earnings performance in Q4FY20 was impacted by the one-time provisioning impact of Rs 5.04bn on Covid19 and subsequent macro related provisions resulting in 85/89% YoY/QoQ dip in PAT.

anticipation of increased LGDs for stage 3 assets (current Stage 3 at 3.8%) falling under morat, similar percentage expected in round 2; (b)Rs2.5bn (c)steep 24%QoQ decline in disbursements led by 21%QoQ vehicle finance...

4 June 2020 CIFCs 4QFY20 PAT declined 85% YoY to INR427m (88% miss), weighed by an 8% operating profit miss and coupled with higher-than-expected provisions. ~76% of CIFCs customers have been granted moratorium. Hence, AUM was flat QoQ (up 12% YoY) at INR606b. This, coupled with lower assignment income (INR330m v/s est. INR660m), caused the 7% miss on total income v/s our estimates. Hence, the company is comfortable to meet all fixed obligations up to Sep20 without availing moratorium from its lenders. The GNPL ratio increased 30bp QoQ to 3.8%. This is slightly negative given that the 4Q is typically a strong season and the company granted moratorium to customers in Mar20. Some customers who were overdue on 29 moratorium have cleared EMIs for 1-2 months. Also, among non- moratorium customers, the slippage rate into higher buckets has been lower. However, not many moratorium customers are paying dues.