CHOLAFIN - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.2

📊 Core Financials

Earnings Strength: EPS of ₹53.0 and PAT of ₹1,136 Cr (down from ₹1,267 Cr) still reflect strong profitability, with a 20.6% quarterly variation.

Return Metrics: ROE at 19.7% is robust, while ROCE at 10.3% is moderate—typical for NBFCs with high leverage.

Debt Profile: Debt-to-equity of 7.40 is high but expected in lending businesses; leverage is used to scale returns.

Cash Flow: Not explicitly stated, but consistent earnings and strong ROE suggest healthy operating cash flows.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 30.0 Slightly above industry average (24.0)

P/B Ratio ~5.64 Premium valuation, justified by ROE

PEG Ratio 1.17 Fairly valued relative to growth

Dividend Yield 0.13% Minimal income play

Valuation is reasonable for a high-growth, high-quality NBFC with strong fundamentals.

🏢 Business Model & Competitive Advantage

Cholamandalam Investment and Finance Company Ltd. (CHOLAFIN) is part of the Murugappa Group and operates across

Vehicle finance

Home loans

SME lending

Recently launched gold loans

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Its strengths include

Diversified lending portfolio

Strong rural and semi-urban presence

Tech-driven underwriting and collections

High asset quality and prudent risk management

The company has delivered consistent growth and is expanding into new verticals to sustain momentum

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📈 Technical & Sentiment Indicators

RSI: 64.5 – Approaching overbought territory.

MACD: 18.6 – Bullish momentum.

Volume Dip – Below weekly average, suggesting short-term cooling.

DMA 50 & 200: Current price is above both, indicating strength.

💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹1,480–₹1,510, near DMA 50 and below current price.

Current Price ₹1,586: Slightly above ideal entry, but not overpriced.

🕰️ Long-Term Holding

Strong Hold or Accumulate on Dips: Solid fundamentals, expanding product lines, and consistent ROE make it a long-term compounder.

Watch Asset Quality & Leverage: High debt levels are typical but require close monitoring in macro downturns.

You can explore Cholamandalam’s latest valuation and analyst targets or its financial overview for deeper insights. Let me know if you'd like a peer comparison with Bajaj Finance or Muthoot Finance.

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