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Cholamandalam Investment And Finance Company Ltd. is witnessing a broad-based recovery in disbursement momentum, with Jan’26 trends remaining encouraging and tracking ahead of Q3, hinting at better growth delivery in Q4. This should support the management’s 20-22% AUM growth guidance for FY26.
The vehicle finance segment asset quality is showing signs of gradual recovery with improvement across delinquencies and collections, setting the stage for lower credit costs from Q4 onwards.
Similar encouraging trends are visible across other segments. Net interest margins remain resilient, supported by a favourable shift toward higher-yielding products and improved cost of funds.
With improving demand conditions, disciplined underwriting and stabilising credit costs, Cholamandalam is well positioned to deliver sustainable AUM growth and earnings recovery over FY27-28E.
Valuation and Recommendation
Axis Securities reiterates its Buy recommendation on the stock with a target price of Rs 2,000/share, implying an upside of 25% from the current market price and values the company at 4.4x Sep’27E book value vs 3.5x Sep’27E BV currently.
Key Risks to brokerage’se stimates and target price
- The key risk remains a slowdown in overall credit growth, which could potentially derail our earnings estimates.
- Inability to scale up new products, along with asset quality concerns cropping up, continues to remain a risk to our earnings estimates.
Click on the attachment to read the full report:
Axis Securities Cholamandalam Q3fy26 Results Review.pdf
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