CHOLAFIN - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.8

📊 Fundamental Analysis

Cholamandalam Investment and Finance Company (CHOLAFIN) is a well-established NBFC with solid growth metrics, though current valuations suggest it's slightly expensive for fresh long-term entry.

Metric Value Implication

Market Cap ₹1,24,923 Cr Large-cap; strong institutional presence

Stock P/E 29.3 Above industry PE of 25.2; slightly overvalued

PEG Ratio 1.15 Fairly valued; not a deep value play

ROE / ROCE 19.7% / 10.3% Strong profitability and capital efficiency

Dividend Yield 0.13% Minimal income; growth-focused stock

Debt-to-Equity 7.40 High but manageable for NBFC; lower than peers

EPS ₹50.7 Solid earnings base

Qtr Profit Var +18.2% Consistent growth momentum

FII/DII Holding Change -0.27% / +0.56% DII accumulation; FII trimming slightly

📉 Technical Analysis

Current Price: ₹1,485

DMA 50 / DMA 200: ₹1,553 / ₹1,465 → Trading below 50 DMA; short-term weakness

RSI: 35.8 → Near oversold zone; potential for technical bounce

MACD: -16.5 → Bearish momentum

Volume: Below average; reduced trading interest short-term

💰 Ideal Entry Price Zone

Given the valuation and technical setup

Ideal Entry Zone: ₹1,400–₹1,450

This range offers a better risk-reward balance, closer to 200 DMA and support levels

Avoid fresh entry above ₹1,550 unless earnings growth accelerates or broader market sentiment improves.

📈 Long-Term Investment Outlook

Why it’s a decent candidate

Strong ROE and consistent profit growth

Lower debt-to-equity than many NBFC peers

Large-cap stability with diversified lending portfolio

DII accumulation signals domestic confidence

Caution flags

PEG > 1 suggests fair valuation, not undervaluation

P/E premium over industry average may limit upside

Low dividend yield — not ideal for income investors

FII trimming could reflect valuation concerns

🏁 Exit Strategy / Holding Period

If you already hold this stock

Holding Period: 2–4 years to capture compounding growth

Exit Strategy

Consider trimming near ₹1,650–₹1,680 (recent high) if valuations stretch further

Hold as long as ROE stays above 18% and PEG remains near or below 1.2

Reassess if earnings growth slows or P/E expands without corresponding EPS growth

Would you like a head-to-head comparison between CHOLAFIN and CHOLAHLDNG to decide which fits better in your portfolio?

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