Comments
ICICI Securities
CIFC (Add)
CMP: ₹285.65
Target: ₹305
Cholamandalam Investment and Finance Company (CIFC) is a diversified non-banking finance company. The company provides vehicle finance, home loans and corporate mortgage loans, small and medium enterprises (SME) loans, investment advisory services, stock broking and a range of other financial services.
We recently met the management of Cholamandalam Investment and Finance Company (CIFC) and came back reassured. In addition to the broader slowdown in the auto OEMs (original equipment manufacturers), the recent headwinds in the NBFC (non-banking finance company) space and the consequent tight liquidity have forced most vehicle financing NBFCs to go slow on growth, but not CIFC.
We feel, given CIFC’s franchise, it will be a disproportionate beneficiary of the distortion that has plagued NBFCs in the last nine months. With a diversified bouquet of products in the vehicle financing space and a much improved home equity (HE) franchise, it can use the levers to improve its NIMs while keeping the operating cost ratios stable. We expect it to contain credit costs within 80 bps for FY20E resulting in a healthy RoA of 2.3 per cent (with improvement bias). Maintain ‘Add’ with a target price of ₹305 (from ₹300 earlier).
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.