Target: ₹1,807
CMP: ₹1,695.95
Cholamandalam Investment & Finance Co has delivered a better-than-expected quarter, with operating income in line and stable net interest income (NII), while easing credit costs driven by asset-quality stabilization supported higher earnings.
On the business front, disbursements grew 16 per cent yoy and 23 per cent qoq, led by a 17 per cent yoy increase in Vehicle Finance, aided by improving CV/PV demand, GST-led price corrections and better fleet utilization, strengthening visibility on achieving the 20-21 per cent AUM growth target. The management highlighted continued improvement in asset quality, with vehicle delinquencies plateauing, early-bucket indicators trending better and NCLs in unsecured portfolios declining on tighter underwriting and portfolio clean-ups.
Against this backdrop, we increased our estimates slightly. From a valuation perspective, the stock has corrected over 12 per cent over the past two months and now trades near mean +1SD multiples, offering room for upside. Accordingly, we upgrade the stock to Buy rating (from Neutral) with a revised target price of ₹1,807 (earlier ₹1,622), based on 4.0x P/ABV on FY28E.
We also position Cholamandalam Investment & Finance as our top pick in the auto finance space.
Published on February 3, 2026