2 Brokerages Suggest Buying Or Holding Of This Large Cap NBFC Stock

Two brokerage firms, AnandRathi and Prabhudas Lilladher have suggested buying or holding the stock of Cholamandalam Investment and Finance Company Ltd. Both the broking firms feel that this non-banking finance company (NBFC) has shown very strong growth across the board in the last quarter and its future has tremendous potential.

In Q4, Cholamandalam Investment and Finance Company (CIFC) reported AUM growth of 11.6%QoQ/38.5% YoY given strong momentum in new business verticals - up 30% QoQ, Chola's assets under management (AUM) increased by a robust 38% (Yoy), noted the brokerage firms.

Anandrathi suggests buying shares with a target price of Rs 1,060 per share
As per Anandrathi's research report, the company's expanding product portfolio and deepening penetration in semi-urban and rural markets are likely to aid the expansion of loans at a 26% CAGR over FY23-FY25. The changing product mix, a higher share of new businesses, and adept treasury management drive a stable 7.8% NIM.

On higher loan growth and opex, we raise our FY24e and FY25e profit after tax (PAT)to estimates of 14% and 18%. Led by higher growth expectations, we raise our 12-month target price to Rs 1,060 per share. With many levers of loan growth, greater efficiencies, and robust collection infrastructure, we maintain our Buy rating on the stock, despite premium valuations.

Prabhudas Lilladher Suggests Holding the stock with a target price of Rs 900 per share
The brokerage retains its asset quality forecasts in its research report. Asset quality improved, as Stage-3 came down at 3.01% below the estimated 3.4%, 50bps QoQ and Stage-2 at 3.68% vs 4.91% in Q3FY23. GNPA as per RBI norms also reduced and came in at 4.63% vs 5.37% in Q3FY23. We maintain our asset quality forecasts (3.2%/2.7%: FY24/25).

Prabhudas Lilladher explains why it has asked investors to hold the stock of the company, " We maintain our 'HOLD' rating and increase TP to Rs900 (4.4x on Sep'24E PABV) from Rs820 (earlier:4.4x SepFY24E PABV) as we increase our FY24/25E NII estimates by 13.5%/20.8%, given AUM growth of 24% each (from 20% earlier) led by scale-up of new businesses while maintaining strong growth in traditional vehicle finance business."

About Cholamandalam Investment and Finance Company
Cholamandalam Investment and Finance Company is a financial and investment service provider headquartered in Chennai and has 1029 branches across the country. It is one of the 28 businesses under the Murugappa Group. It is a large cap firm incorporated in 1978 to commence business as an equipment financing company and has today emerged as a comprehensive financial services provider offering vehicle finance, home loans, home equity loans, SME loans, investment advisory services, stock broking, and a variety of other financial services to customers.

Share price of Cholamandalam Investment and Finance Company
The latest stock price of Cholamandalam Investment and Finance Company is Rs 992.40 per share, it is up by 4.45 per cent over the previous day's closing. The 52-week high is at Rs 999.15 per share while the 52-week low is at Rs 594 per share. The share price has surged massively by 56 per cent in the last one year while in three years it has exponentially grown by nearly 598.87 per cent.

Disclaimer

The stock has been picked from the brokerage reports of Prabhudas Lilladher and AnandRathi.. Greynium Information Technologies, the Author, and the respective Brokerages house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.