Cholamandalam Investment and Finance Company have posted robust Q1 results, with their net profit increasing by 26.3% to reach Rs 710 crore. The company’s net interest income (NII) also witnessed strong growth, surging by 29.7% to Rs 2,127 crore. Additionally, the company’s assets under management (AUM) saw significant growth, rising by about 42% to reach Rs 1.22 lakh crore during the first quarter.
The board has granted approval for the company to raise Rs 4,000 crore through Qualified Institutional Placement (QIP). Following the release of these impressive results, several brokerage firms have shared their views on Cholamandalam Investment and Finance Company’s stock.
Cholamandalam Investment and Finance Company Reports 26.3% Net Profit Growth
Jefferies has expressed a bullish outlook on the stock, giving it a “buy” rating with a target of Rs 1350 per share. While the profit for Q1 was slightly lower than estimates due to reduced NII and higher provisions, the AUM showed strong annual growth of 40%. However, net interest margin (NIM) declined by 33 basis points on a quarterly basis, impacted by higher cost of funds (CoF). Credit cost also rose by 20 basis points year on year due to higher credit expenses in new business.
Net Interest Income (NII) Surges by 29.7%, AUM Rises 42%
On the other hand, CLSA downgraded the stock from “buy” to “outperform” but maintained a target price of Rs 1,250 per share. Although the company’s growth was robust, NIM remained low. Nevertheless, CLSA has a positive medium-term growth outlook for the company, citing stable asset quality.
Morgan Stanley holds an “equal-weight” rating on Cholamandalam Investment and Finance Company with a target share price of Rs 1,000. While the company benefited from lower operating costs, the decline in NIM was sharper than expected, in line with the company’s guidance. Given the recent rally in the stock, Morgan Stanley suggests a possible cooling down in the near term.
