Cholamandalam Inv. and Fin. Co.: Strong profitability outcome... ...but vehicle finance asset quality remains on higher side; maintain Neutral with 4% upside potential

研报英文原文证据摘录

Cholamandalam Inv. and Fin. Co.: Strong profitability outcome... ...but vehicle finance asset quality remains on higher side; maintain Neutral with 4% upside potential

Nomura | Cholamandalam Inv. and Fin. Co. 28 July 2026

Company profile

Cholamandalam Investment and Finance Company Limited (CIFC) was incorporated in 1978 as the financial services arm of the Murugappa Group.

CIFC commenced business as an equipment financing company and has today emerged as comprehensive financial services provider offering

vehicle finance, home loans, loan against property, SME loans, secured business & personal loans, consumer & small enterprises loans and a

variety of other financial services to customers

Valuation Methodology

We value the company using residual income methodology to arrive at our TP of INR1,820, implied PB as of Jun-28 is 3.3x PB. We have used a

discounted residual income method over other valuations methods such as Gordon Growth Model. We prefer residual income as it juxtaposes the

profits with the cost of capital required to deliver those profits. The benchmark index is Nifty 50

Risks that may impede the achievement of the target price

Downside risks- 1) Given the company finances CV,CE, PV, Tractors and used vehicles, which are utilised in industrial and the services industry,

any slowdown in economic growth could put our growth assumptions at risk; 2) natural calamities, monsoon, etc can impact the condition of vehicles

which in turn reduces the ability of owners in repaying EMIs, leading to elevated credit cost; and 3) the company is diversifying into new segments

such as consumer, gold, and business loans. Thus any adverse selection or regulatory overhang can impact credit costs Upside risks - 1) fast scale