Cholamandalam Investment Q4 Results Review - Growth Outlook Robust; NIM Trajectory Positive: Nirmal Bang

Nirmal Bang Report

Cholamandalam Investment and Finance Company Ltd.’s Q4 FY24 net interest income/pre-provision operating profit deviated by -3.1%/-2.9% from our estimates. Profit after tax was higher by 8% on account of lower provisions.

Cholamandalam reported strong assets under management growth of 37% YoY to Rs 1,456 billion led by robust growth in new business verticals. We expect FY25 growth to be driven by ssed/ passenger vehicles and new business verticals (consumer and small enterprise loan, secured business and personal loan and small and medium enterprise).

Reported net interest margin improved to 7.8%, led by a re-pricing and growth in used vehicles. We expect NIMs to improve in FY25 benefited by a lower cost of fund; expect opex to be elevated as the company is in an expansion phase.

Credit cost stood at ~1.0% in FY24 and we expect it to remain in the range of 0.8%-1% in FY25E/ 26E.

We expect assets under management growth of 25.3%/ 23.5% in FY25/ FY26E with an return on asset of 3.1% in FY26E. We Cholamandalam keeping an unchanged multiple of 4.2 times March-26 adjusted book to arrive at our target price of Rs 1,400. Maintain Accumulate as valuation is already at a premium and prices in all the positives.

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