Target: ₹2,160
CMP: ₹1,829
Cholamandalam Investment & Finance company’s (CIFC) core vehicle-finance franchise continues to provide scale, but the next phase of growth is increasingly being supported by mortgage, consumer finance, MSME and gold loans.
We expect CIFC to sustain ~20 per cent+ AUM growth over the medium term even as vehicle finance’s share of the portfolio declines. The gradual shift toward a broader product mix should reduce its dependence on any single segment and make growth more resilient across cycles.
CIFC is entering a phase where balance-sheet diversification, rather than merely balance-sheet expansion, should drive earnings growth. Its established franchise provides a strong foundation for scaling up the adjacent businesses without requiring a fundamental change in its operating model. We expect the combination of ~20 per cent+ growth, resilient NIMs, improving operating leverage and normalised credit costs to drive a meaningful improvement in profitability.
At 4.1x FY27E P/BV, CIFC trades at a premium to its vehicle-financing peers. We believe this premium is justified by its stronger growth trajectory and superior return profile, with RoA/RoE expected at 2.7 per cent/20 per cent by FY28EWe forecast about 27 per cent PAT CAGR over FY26-28E and reiterate BUY with a target price of ₹2,160, based on about 4x Mar’28E BVPS.
Key risks: Rural cash-flow stress, new-business seasoning, funding-cost pressure and cross-selling economics.