'Buy' Cholamandalam Finance Shares Maintains Motilal Oswal On Strong Growth Outlook — Check Target Price

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Motilal Oswal Report

Motilal Oswal has reiterated its Buy rating on Cholamandalam Investment and Finance Company Ltd. with a target price of Rs 2,000, valuing the stock at 4x Dec’27E book-value-per-share.

The brokerage expects Cholamandalam to deliver a PAT CAGR of ~25% over FY25–28, supported by robust AUM growth, margin expansion, and improving asset quality.

Valuation and view

Cholamandalam is gradually evolving into a more robust and resilient NBFC—one that is less cyclical, more diversified, and increasingly anchored in stable, secured retail and SME income streams.

The company’s measured approach of curbing exposure to riskier product lines, while simultaneously expanding newer businesses, such as CD and gold loans, underscores its commitment to preserving earnings quality and maintaining balance sheet strength.

The company is navigating a complex operating environment by reinforcing its core businesses while taking corrective measures in an underperforming segment like consumer and small enterprise loan.

A key management priority is improving operational efficiency, with efforts directed toward enhancing productivity and optimizing costs, particularly in its vehicle, home loans and loan-against-property businesses.

Cholamandalam trades at 4x FY27E P/BV, a premium that the brokerage believes is well-deserved and likely to sustain. This reflects the company’s consistent focus on navigating vehicle demand cyclicality while sustaining healthy AUM growth and stable asset quality through a well-diversified product mix.

Motilal Oswal expects Cholamandalam to deliver a PAT CAGR of ~25% over FY25-28, with RoA/RoE of 2.7%/20% by FY28, hence reiterates Buy with a target price of Rs 2,000 (based on 4x Dec’27E BVPS).

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