Motilal Oswal Initiates 'Buy' on Cholamandalam, Sets ₹1870 Target
Overview
Motilal Oswal has initiated coverage of Cholamandalam Investment (CIFC) with a 'Buy' rating and a ₹1,870 price target. The brokerage expects strong disbursement growth in vehicle finance, driven by demand and GST benefits, and notes early improvements in asset quality.
Stocks Mentioned
Growth Drivers and Asset Quality Improvement
Motilal Oswal's analysis highlights strong growth prospects for Cholamandalam Investment and Finance Company (CIFC), anticipating robust, broad-based disbursement growth. The firm expects this expansion to be driven by strong demand across commercial vehicles (CVs), passenger vehicles (PVs), and two-wheelers.
Lower Goods and Services Tax (GST) rates have boosted vehicle affordability, strengthening market demand and improving sales conversion. CIFC had previously faced asset quality challenges, with Gross Non-Performing Assets (GNPA) rising due to higher delinquencies in vehicle finance and increased slippages in its CSEL segment. However, collection efficiencies in vehicle finance are now improving, and credit costs are easing. This moderation is partly due to CIFC's strategic exit from the CSEL business.
