Cholamandalam Q4 Results Review: IDBI Capital Downgrades The Stock To 'Hold' But Hikes Target Price

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IDBI Capital Report

Cholamandalam Investment and Finance Company Ltd.’s assets under management growth remained strong at 27% YoY led by 14% YoY (FY25) growth in disbursements and lower repayment ratio. Management guided for 20-25% AUM growth led by 17-20% disbursement growth for longer term.

Net interest margin improved by 30bps YoY led by increase in yield on advances. We expect benefit of lower interest rate environment on account of fixed rate VF book.

Asset quality improved slightly with GS3 at 2.81% vs 2.91%. Net interest income grew by 29% YoY led by improvement in NIMs YoY; however, pre-provision operating profit grew by 43% YoY led by increase in other income (up 33% YoY). PAT grew by 20% YoY led by higher provisions (up 228% YoY).

We have largely maintained our estimates and downgrade to “Hold” with a new target price of Rs 1,630 (earlier Rs1,590) based on P/BV of 4.1x FY27E as stock has run up by ~21% in last few months.

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