HDFC Securities’ research report on Cholamandalam Investment & Finance
CIFC ended FY18 on a high, with a strong beat in 4Q. The 18% sequential acceleration in disbursals (especially in the Vehicle Finance slice), coupled with the steady NIM uptick (8.70%, +30bps QoQ) led to a core earnings beat of ~6%. Though costs were at a multi-qtr high, justification was visible in the stark reduction in GNPAs to 2.94% (higher incentives paid for collection) and the rapid expansion in reach (170 in the past 12 months).
RoAAs are set to expand 15bps over FY18-20E as oplev benefits flow in. With best-in-class return ratios, premium valuations are justified. Maintain BUY with a TP of Rs 1,767 (4x Mar-20 ABV of Rs 442)