Risk Reward Update

Research evidence excerpt

Risk Reward Update

UpdateM

RiskRisk RewardReward– Cholamandalam- CholamandalamInvestment and FinInvestmentCo Ltd (CHLA.NS)and Fin Co Ltd

(CHLA.NS)Strong franchise; relative valuations vs. peers and own earnings appear full

PRICE TARGET Rs1,720.00 EQUAL-WEIGHT THESIS

Probability weighted 85% base, 10% bear and 5% bull; Residual income model. Skew to bear ▪We view Chola as a strong quality

case reflects current geopolitical uncertainty. franchise. We like the business model

We value the business over three phases: a five-year high-growth period, a 10-year maturity structurally.

period and a terminal period. ▪However, we are below consensus

Key assumptions: Cost of equity 13.08% (beta 1.15, risk-free rate 6.75%, market risk premium earnings estimates on cyclical macro risks

of 5.5%), terminal growth rate 6%. (inflation, below normal monsoon).

that context, valuations appear full Rs1,837.64 ▪In

relative to its earnings and expensiveConsensus Price Target Distribution Rs1,495.00 Rs2,100.00 relative to the peer group. MS PT

we remain EW.Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates ▪Hence,

Consensus Rating Distribution

RISK REWARD CHART

74% Overweight

21% Equal-weight

INR

Rs2,575.00Rs2,575.00(+43.12%)Rs2,575.00(+43.12%)(+43.12%) 6% Underweight

MS Rating

2400 Source: Refinitiv, Morgan Stanley Research

Risk Reward Themes 1800 Rs1,799.20Rs1,799.20Rs1,799.20

Rs1,720.00Rs1,720.00(-4.40%)Rs1,720.00(-4.40%)(-4.40%)

Self-help: Positive

View descriptions of Risk Rewards Themes here

Rs1,015.00Rs1,015.00(-43.59%)Rs1,015.00(-43.59%)(-43.59%)

JUN '25 DEC '25 JUN '26 JUN '27

Key: Historical Stock Performance Current Stock Price Price Target

Source: Refinitiv, Morgan Stanley Research

BULL CASE Rs2,575.00 BASE CASE Rs1,750.00 BEAR CASE Rs1,015.00