Motilal Oswal has given a buy rating to Cholamandalam Investment & Finance with a revised target price of Rs 200 based on 1.7 times FY22E BVPS. The share price of the company moved up by 1.51 per cent from its previous close of Rs 142.60. The last traded stock price is Rs 144.75.
According to the brokerage, disbursements declined 36 per cent year on year to Rs 57 billion, driven by similar decline in vehicle finance (VF) and loan against property (LAP). The muted performance was due to (a) underlying weakness in CV demand, despite the migration to BS6, and (b) the lack of vehicle supply at dealer level. Hence, AUM was flat quarter on quarter (up 12 per cent year on year) at Rs 606 billion. While the company benefited from lower cost of funds (down 30bp quarter on quarter to 8.3 per cent), it also witnessed some yield pressure (down 60 bp quarter on quarter to 14.4 per cent). This, coupled with lower assignment income (Rs 330 million against brokerage estimate of Rs 660 million), caused the 7 per cent miss on total income against brokerage estimates.