Cholamandalam Investment’s steady game plan impresses analysts
Motilal Oswal Financial Services (MOFSL) has reaffirmed its ‘Buy’ rating on Cholamandalam Investment and Finance Company (CIFC), betting big on the NBFC’s evolving business model and resilience.
Analysts believe the company is turning into a stronger, more balanced player, shifting focus toward secured retail and SME lending — areas that promise more stability and consistent earnings.
The brokerage has set a target price of ₹1,920, implying a 16% upside from the current market price of ₹1,650.10 on the NSE.
Aiming for 25% profit growth by FY28
According to Motilal Oswal analysts Abhijit Tibrewal, Nitin Aggarwal, and Raghav Khemani, Cholamandalam is expected to deliver a 25% compound annual growth rate (CAGR) in profit after tax (PAT) between FY25 and FY28.
They project return on assets (RoA) at 2.7% and return on equity (RoE) at 20% by FY28 — metrics that reflect the company’s strong operational discipline and risk control.
“CIFC’s steady focus on improving operational efficiency, optimizing costs, and growing new businesses like consumer durable and gold loans positions it well for long-term growth,” the report noted.
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Strength in diversity: The key growth driver
Motilal Oswal’s note highlights that Cholamandalam’s strength lies in its diversified business model. The company’s cautious stance toward riskier segments — like heavy commercial vehicles — and growing focus on home loans and SME financing has improved earnings visibility even during volatile market cycles.
Despite a “soft cyclical patch,” the brokerage says the company’s asset quality remains stable, and AUM (assets under management) is likely to grow around 20% CAGR through FY25–28.
CIFC currently trades at 3.8x FY27E P/BV, a valuation premium analysts say is “well-deserved and sustainable.”
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What’s next for investors
In simple terms — Motilal Oswal is confident that Cholamandalam Investment is playing the long game right. It’s managing the tricky parts of the lending business — vehicle finance and home loans — with precision while expanding into fresh, promising areas.
The numbers look solid, the growth story seems intact, and the risk management is on point. For investors looking for a steady compounder in the NBFC space, CIFC continues to be a name worth watching.
