Cholamandalam Q3 Results Review: DRChoksey Reiterates 'Buy' On The Stock, Hikes Target Price — Here's Why

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Deven Choksey Report

Cholamandalam Investment and Finance Company Ltd. has demonstrated strong assets under management growth of ~34.0% YoY, driven by robust disbursements across key segments, particularly vehicle finance, and loan against property. While elevated credit costs remain a concern, management’s strategic exit from partnerships in the CSEL segment and improving asset quality in small and light commercial vehicles should aid gradual normalization.

Despite near-term macroeconomic challenges, Cholamandalam’s well-diversified portfolio, prudent risk management, and strong execution capabilities reinforce confidence in sustained growth.

We have factored in a growth of 23.8% CAGR in AUM and 26.3% in profits over FY24-27E, led by healthy operating performance driven by healthy operational performance and increasing traction in the loan against property and home loan segments. However, we trim our Adjusted book value estimates for FY26E/FY27E by 2.3%/2.4%, respectively, to account for the impact of higher credit costs.

We roll over our valuation to FY27E and assign a P/ABV multiple of 4.8 times (earlier 5.5x FY27) to the FY27E adjusted book value per share of Rs 339.6 to arrive at a target price of Rs 1,630/share (earlier Rs 1,531), implying an upside of 16.8% from the current market price. Accordingly, we reiterate our rating at “Buy” on the shares Cholamandalam.

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