Buy Cholamandalam Investment and Finance Company; target of Rs 580: Sharekhan

Sharekhan is bullish on Cholamandalam Investment and Finance Company has recommended buy rating on the stock with a target price of Rs 580 in its research report dated February 18, 2021.

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Sharekhan’s research report on Cholamandalam Investment and Finance Company

Cholamandalam Investment Finance Corporation (CIFC) saw moderate rise in stressed loans; and as the economy picks up and recoveries improve, we expect NIM tailwinds and productivity improvement to drive earnings. CIFC’s well-contained stressed loan is due to its favourable business mix; CIFC has a balanced portfolio with exposure to small CV operators and rural business (less impacted by the lockdown) and home equity segments, which were support factors. At the CMP, the stock is available at 4.9x/4.0x its FY2022E/FY2023E ABVPS, which is reasonable.

Outlook

We have revised our target multiples considering normalising growth and credit cost scenario; we maintain Buy with a revised PT of Rs. 580.

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