29 Jul , 2026 By : Debdeep Gupta
Nomura maintained its Neutral rating on Cholamandalam Investment & Finance after the company's Q1FY27 results, while raising its target price to Rs 1,820 from Rs 1,730.
The brokerage said the company's Q1 net profit of Rs 16.54 billion rose 46% year-on-year and was "supported by 30% year-on-year growth in operating profit and a beat on credit costs." Net profit was "15?at on our estimates and 10?at on consensus estimates."
Nomura noted that "key beat to our numbers was on credit cost (16% lower)," but added, "we believe this is not a clean beat as gross stage (GS) 2 3 (%) of overall book is up 49 basis points quarter-on-quarter." It also said the loan against property portfolio "led with the highest sequential deterioration."
On asset quality, the brokerage highlighted that "vehicle finance (VF) GS 3 (%) is now at 4.05%, the highest among CIFC's 1Qs since COVID." While "the rate of deterioration of VF's GS 3 (%) between 4Q and 1Q has slowed," Nomura said, "we remain cautious with build credit cost estimate of 1.6% for FY27-28F."
The brokerage also noted a change in the company's disbursement recognition process, saying management "now recognises disbursement from the time of cheque clearance," which resulted in "a slight slowdown in disbursement and yields of home loans, LAP and secured business personal loans (SBPL) segments."
However, Nomura said "the operational change should stabilise ahead," adding that management "remains optimistic of the growth outlook and guides for 23% AUM growth in FY27FE." The brokerage has built in 22-23% AUM growth for FY27-28.
Nomura said it expects Cholamandalam Investment to "deliver 24% net profit CAGR over FY26-29F" and "2.5% ROA by FY28-29F," while reiterating its Neutral rating.
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