CHOLAFIN - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.1
| Stock Code | CHOLAFIN | Market Cap | 1,33,210 Cr. | Current Price | 1,563 ₹ | High / Low | 1,832 ₹ |
| Stock P/E | 25.5 | Book Value | 357 ₹ | Dividend Yield | 0.13 % | ROCE | 9.70 % |
| ROE | 19.3 % | Face Value | 2.00 ₹ | DMA 50 | 1,562 ₹ | DMA 200 | 1,590 ₹ |
| Chg in FII Hold | -1.69 % | Chg in DII Hold | 2.37 % | PAT Qtr | 1,641 Cr. | PAT Prev Qtr | 1,288 Cr. |
| RSI | 53.0 | MACD | 8.18 | Volume | 80,20,143 | Avg Vol 1Wk | 31,89,329 |
| Low price | 1,299 ₹ | High price | 1,832 ₹ | PEG Ratio | 1.02 | Debt to equity | 6.94 |
| 52w Index | 49.5 % | Qtr Profit Var | 29.5 % | EPS | 61.3 ₹ | Industry PE | 18.2 |
📊 Financials: CHOLAFIN demonstrates strong fundamentals with ROE at 19.3% and EPS of ₹61.3, reflecting efficient capital utilization. Quarterly PAT rose from ₹1,288 Cr. to ₹1,641 Cr. (+29.5%), showing robust earnings momentum. However, ROCE at 9.70% is modest, and debt-to-equity at 6.94 highlights high leverage typical of NBFCs.
💹 Valuation: The stock trades at a P/E of 25.5, above the industry average of 18.2, indicating premium valuation. Book value of ₹357 results in a P/B of ~4.4, relatively expensive compared to peers. PEG ratio of 1.02 suggests fair valuation relative to growth. Intrinsic value appears slightly lower than current price, requiring cautious entry.
🏢 Business Model: As a leading NBFC, CHOLAFIN benefits from strong retail lending, vehicle finance, and diversified financial services. Its competitive advantage lies in consistent profit growth and domestic institutional support (+2.37% DII holdings). However, reduced FII interest (-1.69%) and high leverage remain concerns.
🎯 Entry Zone: Attractive entry between ₹1,520–1,560, near 50 DMA support. Long-term investors may hold for 3–5 years, with exit considerations if ROE falls below 15% or debt levels rise unsustainably.
Positive
- Strong ROE (19.3%) and EPS of ₹61.3.
- Quarterly PAT growth of 29.5% (₹1,288 Cr. → ₹1,641 Cr.).
- PEG ratio of 1.02 indicates fair valuation.
- DII holdings increased (+2.37%), showing domestic institutional confidence.
Limitation
- High debt-to-equity ratio of 6.94 increases leverage risk.
- ROCE at 9.70% is modest compared to peers.
- P/E of 25.5 above industry average (18.2), suggesting premium valuation.
- FII holdings decreased (-1.69%), showing reduced foreign investor confidence.
- Dividend yield very low at 0.13%.
Company Negative News
- Reduced foreign institutional interest (-1.69%) highlights cautious sentiment.
Company Positive News
- Quarterly PAT growth and EPS improvement reflect strong operational performance.
- DII inflows (+2.37%) show domestic institutional support.
Industry
- NBFC sector trades at an average PE of 18.2.
- CHOLAFIN’s PE of 25.5 suggests premium valuation relative to peers.
Conclusion
✅ CHOLAFIN is a fundamentally strong NBFC with consistent profit growth and fair PEG valuation. Entry near ₹1,520–1,560 offers value, with a 3–5 year horizon recommended. Monitor debt levels, ROE sustainability, and institutional sentiment closely. Consider partial exits near ₹1,800–1,830 resistance if valuations remain stretched without earnings improvement.