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CHOLAFIN - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | CHOLAFIN | Market Cap | 1,29,600 Cr. | Current Price | 1,521 ₹ | High / Low | 1,832 ₹ |
| Stock P/E | 26.8 | Book Value | 307 ₹ | Dividend Yield | 0.13 % | ROCE | 10.3 % |
| ROE | 19.7 % | Face Value | 2.00 ₹ | DMA 50 | 1,655 ₹ | DMA 200 | 1,617 ₹ |
| Chg in FII Hold | -0.29 % | Chg in DII Hold | 0.27 % | PAT Qtr | 1,288 Cr. | PAT Prev Qtr | 1,155 Cr. |
| RSI | 33.5 | MACD | -47.7 | Volume | 21,57,842 | Avg Vol 1Wk | 22,69,970 |
| Low price | 1,359 ₹ | High price | 1,832 ₹ | PEG Ratio | 1.04 | Debt to equity | 7.24 |
| 52w Index | 34.2 % | Qtr Profit Var | 18.5 % | EPS | 57.6 ₹ | Industry PE | 17.2 |
📊 Financial Overview
- Revenue & Profitability: Quarterly PAT rose from 1,155 Cr. to 1,288 Cr., showing healthy growth. EPS at 57.6 ₹ reflects strong earnings power.
- Margins & Returns: ROE at 19.7% is solid, while ROCE at 10.3% is moderate, indicating decent efficiency but room for improvement.
- Debt Profile: Debt-to-equity ratio of 7.24 highlights high leverage, typical for NBFCs but a risk factor.
- Cash Flow: Dividend yield at 0.13% is minimal, with reinvestment of profits into growth being the focus.
💹 Valuation Indicators
- P/E Ratio: 26.8 vs Industry PE of 17.2 → trading at a premium valuation.
- P/B Ratio: Current Price 1,521 ₹ vs Book Value 307 ₹ → P/B ~4.95, expensive compared to peers.
- PEG Ratio: 1.04 → suggests fair valuation relative to growth prospects.
- Intrinsic Value: Slightly overvalued compared to industry benchmarks, but supported by strong earnings growth.
🏢 Business Model & Competitive Advantage
- Cholamandalam Investment & Finance operates in vehicle finance, home loans, and SME lending, benefiting from India’s credit demand.
- Competitive advantage lies in strong distribution, diversified lending portfolio, and consistent profit growth.
- High leverage is a structural risk but manageable given growth momentum.
📈 Technical & Entry Zone
- Stock trading at 1,521 ₹, below 50 DMA (1,655 ₹) and 200 DMA (1,617 ₹), showing bearish momentum.
- RSI at 33.5 indicates oversold territory; MACD negative suggests short-term weakness.
- Entry Zone: Attractive between 1,450–1,500 ₹ for accumulation, with long-term holding potential.
✅ Positive
- Strong EPS (57.6 ₹) and quarterly PAT growth.
- Solid ROE (19.7%) supports shareholder returns.
- DII holdings increased (+0.27%), showing domestic institutional confidence.
⚠️ Limitation
- High debt-to-equity ratio (7.24) increases financial risk.
- P/E and P/B ratios indicate premium valuation.
- Dividend yield at 0.13% is very low.
📉 Company Negative News
- No major recent negative news, but reduced FII holdings (-0.29%) reflect cautious foreign sentiment.
📈 Company Positive News
- Quarterly PAT growth from 1,155 Cr. to 1,288 Cr. highlights operational strength.
- Strong lending portfolio diversification supports long-term growth.
🏭 Industry
- NBFC sector benefits from rising credit demand in retail and SME segments.
- Industry PE at 17.2 indicates moderate valuations compared to CHOLAFIN’s premium.
- Competition from banks and other NBFCs remains a challenge.
🔮 Conclusion
- CHOLAFIN shows strong fundamentals with consistent profit growth and solid ROE.
- Valuation is stretched and leverage is high, but long-term prospects remain positive given India’s credit demand.
- Recommendation: Accumulate in the 1,450–1,500 ₹ range for long-term holding, focusing on growth in retail and SME lending.