Check Before You Invest : Cholamandalam Investment and Finance Company Ltd

Q: Which industry/sub-sector does Cholamandalam Investment and Finance Company Ltd belong to?

Cholamandalam Investment and Finance Company Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q: Is Cholamandalam Investment and Finance Company Ltd a good quality company?

Cholamandalam Investment and Finance Company Ltd is a good quality company, based on a consistently good multi-year financial track record. This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q: Is Cholamandalam Investment and Finance Company Ltd undervalued or overvalued?

Cholamandalam Investment and Finance Company Ltd appears Fair, as its key valuation ratios are in line with their past averages. Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more. Valuation Ratios. Price to Earnings, Current: 24.51, Historic Median: 30.26. Price to Book, Current: 4.21, Historic Median: 5.34. Price to Sales, Current: 4.13, Historic Median: 5.22. EV to EBITDA, Current: 12.48, Historic Median: 15.00

Q: Is Cholamandalam Investment and Finance Company Ltd a good buy now?

Cholamandalam Investment and Finance Company Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Q: Total Income growth of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Operating Income growth is 35.04% for FY-2025, which is above its 5-year CAGR of 24.3%, indicating faster growth.

Q: Return on Assets of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Return on Asset is 2.4%, which is in line with its 5-year historical median of 2.5%, indicating stable earnings on assets. Efficiency & Key Metrics. NPM (%), Current: 16.48, Historic Median: 17.82. PPOP (%), Current: 37.86, Historic Median: 33.72. RoA (%), Current: 2.4, Historic Median: 2.5

Q: Return on Equity (ROE) of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Return on Equity is 19.9% for FY-2025, which is in line with its 5-year historical median of 20.2%, indicating the business is making similar use of its shareholders capital.

Q: Pre-provisioning operating profit margin of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 37.86% for FY-2025, which is above its 5-year median(33.72%), indicating increasing margins.

Q: Net Profit Margin of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 16.48% for FY-2025, which is below its 5-year median( 17.82%), indicating decreasing margins.

Q: Does its ROIC exceed its WACC?

Cholamandalam Investment and Finance Company Ltd return on invested capital (ROIC) is 7.37% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

Check Before You Invest : Cholamandalam Investment and Finance Company Ltd

BSE: 511243 NSE: CHOLAFIN ISIN: INE121A01024

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does Cholamandalam Investment and Finance Company Ltd belong to?

Cholamandalam Investment and Finance Company Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q.2 Is Cholamandalam Investment and Finance Company Ltd a good quality company?

Cholamandalam Investment and Finance Company Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on the bank’s performance on Total Income growth, Pre-Provision Operating Profit, RoA, RoE, CAR, and Asset Quality, along with how these metrics compare with its long-term averages.

Q.3 Is Cholamandalam Investment and Finance Company Ltd undervalued or overvalued?

Cholamandalam Investment and Finance Company Ltd appears Fair, as its key valuation ratios are in line with their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios	Current	5-year Historic Median
Price to Earnings	24.51	30.26
Price to Book	4.21	5.34
Price to Sales	4.13	5.22
EV to EBITDA	12.48	15.00

Q.4 Is Cholamandalam Investment and Finance Company Ltd a good buy now?

Cholamandalam Investment and Finance Company Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

How has it performed on generating Profits?
By checking its Total Income growth, NPM, PPOP, RoA and RoE compared to its last 5-year median.
How efficiently has it grown and managed operations?
By checking its Total Asset growth.
How strong is its Capital position and Asset Quality?
By checking its Capital Adequacy Ratio (CAR), GNPA and NNPA.

A: What are the trends in income and profitability?

Q.1 Total Income growth of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Operating Income growth is 35.04% for FY-2025, which is above its 5-year CAGR of 24.3%, indicating faster growth.

Q.2 Return on Assets of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Return on Asset is 2.4%, which is in line with its 5-year historical median of 2.5%, indicating stable earnings on assets.

	Current Level	5-year Historic Median
NPM (%)	16.48	17.82
PPOP (%)	37.86	33.72
RoA (%)	2.4	2.5

Q.3 Return on Equity (ROE) of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Return on Equity is 19.9% for FY-2025, which is in line with its 5-year historical median of 20.2%, indicating the business is making similar use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 37.86% for FY-2025, which is above its 5-year median(33.72%), indicating increasing margins.

Q.5 Net Profit Margin of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 16.48% for FY-2025, which is below its 5-year median( 17.82%), indicating decreasing margins.

Q.6 Does its ROIC exceed its WACC?

Cholamandalam Investment and Finance Company Ltd return on invested capital (ROIC) is 7.37% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 11.25%, indicating value erosion.

B: Does the bank grow efficiently and manage its operating costs?

Q.7 Total Asset growth of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Total Asset growth is 28.78% for FY-2025, which is above its 5-year CAGR of 25.9%, indicating faster growth.

C: How strong is the bank’s capital position and asset quality?

Q.8 Capital Adequacy ratio of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Capital Adequacy ratio (CAR) is 19.75% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Q.9 Asset Quality of Cholamandalam Investment and Finance Company Ltd?

Cholamandalam Investment and Finance Company Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 3.97% for FY-2025, which is in line with its 5-year median 4.00%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 2.63% which is in line with its 5-year median( 2.63%), indicating stable asset quality.

Ownership & governance

D: Promoter shareholding and pledge status of Cholamandalam Investment and Finance Company Ltd?

Q.1 Promoter shareholding and pledge status of Cholamandalam Investment and Finance Company Ltd?

Promoters hold 49.25% of the Cholamandalam Investment and Finance Company Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Cholamandalam Investment and Finance Company Ltd performance compare with that of its Peers?

Q.1 AUM Growth of Cholamandalam Investment and Finance Company Ltd vs Industry Peers?

Cholamandalam Investment and Finance Company Ltd AUM CAGR is 25.9%, compared to the 5-year industry median CAGR of 23.24%, indicating faster growth and gaining its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of Cholamandalam Investment and Finance Company Ltd vs industry peers

Cholamandalam Investment and Finance Company Ltd profit metrics are in line with the industry median level of 17.64%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM (%)	16.48	24.08
PPOP (%)	37.86	25.73
RoA (%)	2.4	3.1

Q.3 Operating efficiency of Cholamandalam Investment and Finance Company Ltd vs industry peers?

Cholamandalam Investment and Finance Company Ltd ROCE (9.7) is below the industry median of (10.9); while the current ROE (20.2) are above than the 5-year average Industry ROE (15.6). This shows that the business is positioned in the middle quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM (%)	16.48	24.08
PPOP (%)	37.86	25.73
RoA (%)	2.4	3.1
ROCE (%)	10.3	10.9
ROE (%)	19.9	15.6

Valuation & price assessment

Q.1 Stock return of Cholamandalam Investment and Finance Company Ltd over the last decade?

Over the last 9 years, the stock has delivered a CAGR of 24% based on the current price.

	9Y	5Y	3Y	1Y
Share Price CAGR	24%	20.9%	12.7%	-7.4%

Q.2 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	24.51	30.26	29.12
Price to Book	4.21	5.34	1.11
Price to Sales	4.13	5.22	9.10
EV to EBITDA	12.48	15.00	11.77

Q.3 Valuation ratios of Cholamandalam Investment and Finance Company Ltd vs historical and industry averages?

The current Price-to-Book (P/B) ratio of 4.21 is lower than its historical median of 5.34, indicating that the stock is trading below its historical average valuation.

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Check Before You Invest : Cholamandalam Investment and Finance Company Ltd

Snapshot

Performance Analysis

Ownership & governance

Peer comparison (industry-wise, mcap)

Profit Metrics

Operating Efficiency

Valuation & price assessment

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