Scripscan:Cholamandalam Investment & Finance Company Ltd
cmp:130
Code:511243
Story:Cholamandalam Investment and Finance Company Limited, a non banking finance company, together with its subsidiaries, provides various financial services to individual and institutional customers in India. The company offers vehicle finance for new and used HCVs, LCVs, SCVs, MLCVs, MUVs, tractors, and cars and 3 wheelers; corporate mortgage loans against collateral of equity shares, commercial/ residential property, and combination of current assets and shares for corporations, promoters, high net worth individuals, and retail broking clients; and loans against residential property to self employed individuals. It also offers mutual funds, life and general insurance, equities, real estate, private equity, and fixed income products. In addition, the company provides stock broking and equity advisory services to institutional and individual investors, as well as acts a depository participant with National Securities Depository Limited and Central Depository Services (India) Limited. As of September 30, 2011, it operated approximately 342 branches. The company was formerly known as Cholamandalam DBS Finance Limited and changed its name to Cholamandalam Investment and Finance Company Limited in June 2010. The company was founded in 1978 and is headquartered in Chennai, India. Cholamandalam Investment and Finance Company Limited is a subsidiary of Tube Investments of India Ltd.The management’s strategy is to leverage its good brand name, strong rural exposure (bottom of the pyramid focus) and relationship with corporate group to establish these businesses. It estimates GF/TF book size ofRs2bn/3bn in FY12 and LTV of 70-80%. The GF/TF business yield is estimated at20-22%/18%, higher than LCV yield at 14.5%.I currently don’t build these inmy estimates and will wait to look for growth trends in these businesses.Management confident of strong FY12 growth outlook and gave strong overall disbursements growth guidance of 15-20% with 30%/20-23% in VF/HE business.I expect strong earnings growth from FY12, on strong underlying nos of asset finance businesses now getting reflected.Maintain Buy with a price target of Rs215 to be achieved in the next 18 months.
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