CHOLAHLDNG - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 2.8
| Stock Code | CHOLAHLDNG | Market Cap | 32,108 Cr. | Current Price | 1,711 ₹ | High / Low | 2,299 ₹ |
| Stock P/E | 467 | Book Value | 72.2 ₹ | Dividend Yield | 0.08 % | ROCE | 6.26 % |
| ROE | 4.88 % | Face Value | 1.00 ₹ | DMA 50 | 1,799 ₹ | DMA 200 | 1,823 ₹ |
| Chg in FII Hold | -0.92 % | Chg in DII Hold | 1.03 % | PAT Qtr | 27.2 Cr. | PAT Prev Qtr | 2.11 Cr. |
| RSI | 44.0 | MACD | -57.2 | Volume | 95,545 | Avg Vol 1Wk | 2,54,987 |
| Low price | 1,357 ₹ | High price | 2,299 ₹ | PEG Ratio | 91.9 | Debt to equity | 0.00 |
| 52w Index | 37.5 % | Qtr Profit Var | 15.5 % | EPS | 3.66 ₹ | Industry PE | 22.5 |
📊 Financials: Cholamandalam Financial Holdings Ltd. shows weak profitability with quarterly PAT at 27.2 Cr, though higher than the previous quarter (2.11 Cr). ROE at 4.88% and ROCE at 6.26% reflect poor efficiency. Debt-to-equity ratio of 0.00 indicates a debt-free balance sheet, which is positive. EPS of 3.66 ₹ is modest, limiting earnings visibility. Overall, financial strength is weak despite a large market capitalization.
💹 Valuation: Current P/E of 467 is extremely high compared to the industry average (22.5), suggesting severe overvaluation. P/B ratio ~23.7 (Price 1,711 ₹ / Book Value 72.2 ₹) is expensive. PEG ratio of 91.9 further highlights stretched valuation relative to growth. Dividend yield of 0.08% is negligible, offering no meaningful income support. Intrinsic value appears much lower than current price, making the stock unattractive at present levels.
🏢 Business Model: Cholamandalam Financial Holdings functions as a holding company with investments in financial services subsidiaries. Competitive advantage lies in group synergies within the Murugappa conglomerate. However, profitability remains inconsistent, and valuations are disconnected from fundamentals.
📈 Entry Zone: Attractive accumulation only if price corrects significantly towards 1,350–1,400 ₹, closer to its 52-week low (1,357 ₹). RSI at 44.0 indicates neutral momentum, while MACD (-57.2) suggests bearish undertone. Investors should be cautious and wait for valuation comfort before entry.
🔒 Holding Guidance: Weak fundamentals, poor efficiency, and extreme overvaluation make this a high-risk investment. Suitable only for speculative positions; long-term investors should avoid or accumulate only at much lower levels.
Positive
- Debt-free balance sheet (Debt-to-equity 0.00).
- Part of Murugappa Group, providing credibility and synergies.
- DII holdings increased (+1.03%), reflecting some domestic confidence.
Limitation
- Extremely high P/E (467) compared to industry average (22.5).
- P/B ratio of 23.7 indicates severe overvaluation.
- ROE (4.88%) and ROCE (6.26%) reflect poor efficiency.
- Dividend yield of 0.08% offers negligible income support.
- FII holdings decreased (-0.92%), showing foreign caution.
Company Negative News
- No major negative news reported, but weak profitability and extreme valuations raise caution.
Company Positive News
- Debt-free operations strengthen financial resilience.
- Part of Murugappa Group, enhancing credibility.
- Improved domestic institutional confidence with DII increase.
Industry
- Financial services sector benefits from rising credit demand and economic expansion.
- Industry P/E at 22.5 suggests moderate optimism.
- Competition remains high, requiring consistent profitability to sustain valuations.
Conclusion
✅ Cholamandalam Financial Holdings Ltd. is debt-free and backed by the Murugappa Group, but weak profitability and extreme overvaluation make it unattractive for long-term investors. Accumulation should only be considered near 1,350–1,400 ₹ for margin of safety, with cautious monitoring of earnings performance.
I can also extend this with a peer comparison against other Murugappa Group financial entities like Cholamandalam Investment & Finance to highlight relative valuation and efficiency. Would you like me to add that?