6 CHOLAFIN share price target reports by brokerages below. See what is analyst's view on CHOLAFIN share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
CIFC Q4FY20 earnings disappointed on several counts: (a)76% customers falling under morat, similar percentage expected in round 2; (b)Rs2.5bn additional provisions over & above Rs2.8bn contingency provisions in anticipation of increased LGDs for stage 3 assets (current Stage 3 at 3.8%) (c)steep 24%QoQ decline in disbursements led by 21%QoQ vehicle finance (VF) and 35%QoQ home equity (HE) decline. While liquidity sufficiency (Rs65bn cash on BS, Rs100bn sanctioned pipe-line) is expected to maintain ALM positioning over morat period, our apprehensions emerge from elongated asset quality downcycle led by meaningful morat quantum (~Rs450bn) spread across 6 months and bleak outlook on transport activity uptick post complete lockdown lift. Against this backdrop, we build weak growth cycle (4-12%), NIM compression (5-6%) and NPA jump (4-5%) over FY21-22E. To that effect our EPS estimates stand down by 60% for FY21 & 6% for FY22. While FY21 return profile takes a beating (RoE:4%/RoA:~1%), CIFC’s continued focus on right product positioning and conservative strategy place the Co. on revival mode. Resultantly, FY22 RoE/RoA bounce back to 16%/2% levels respectively. While unique pandemic challenges are calling for weakness in structural growth levers, we downgrade the stock to ACCUMULATE (earlier BUY). We assign a target multiple of 1.8x PBV FY22E arriving at a price target of Rs189 (earlier Rs229).
There are two aspects of CIFC’s vehicle finance business that stand out compared to most peers: (i) it is well diversified across product segments and (ii) there is no state-level concentration – the largest state accounts for only 11% of total portfolio. While CIFC has managed to deliver 20%+ disbursement and AUM growth in the past, we expect it to slow down to ~15% over the medium term. There could also be ~30bp rise in credit costs unless the macro environment improves. While our estimates on growth and profitability remain largely unchanged, we incorporate the impact of the recent INR9b QIP in our numbers. This results in a 3% increase in our EPS estimate for FY21. Maintain Buy with a target price of INR390 (2.7x FY22E BVPS).
Cholamandalam Investment and Finance Company Ltd (CIFC) is a well diversified play in secured asset segments such as vehicle finance and home equity (loan again property). Diversification across segments/geographies and better access to funds (via parentage and strong credit practices) is enabling CIFC to withstand sectoral headwinds. CIFC has sustained ROAA/ ROAE at 1.9-2.3%/17-22% since FY13. Given its strong market positioning across credit/liquidity cycles led by strategic diversification, robust underwriting and healthy liquidity line-up, we are positive on the stock. We initiate with a “BUY” and arrive at a target price of Rs 411 (3.2x FY22 ABV & 2.5x Post QIP).
Despite robust business traction, Stage 3 assets deteriorated slightly from 3.18% in Q2FY20 to 3.3% in Q3FY20 (but down 20bps YoY). Inspite of modest deterioration, provisions spiked 42-43% YoY/QoQ. While increased provisioning led to PAT miss [PLe of Rs4.01bn], prudency in uncertain times is comforting. Moreover, caution on disbursements (-2.2% YoY) should arrest any incremental delinquencies in new portfolio. Yet we adequately incorporate conservatism in the form of credit costs at 0.9-1.0%, GNPA at 2.75% and NIMs at 6%, expecting stable return profile - RoAs 2.2%/RoE:19.6% over FY21-22E. CIFC’s strong market positioning across credit/liquidity cycles led by strategic diversification, robust underwriting and healthy liquidity line-up prompt us to reiterate BUY. At Sep-21 PABV, we value CIFC at 3.2x arriving at TP of Rs353.
CIFC has a diversified portfolio, both in terms of geography and product. It is also expanding into new segments like home loans and MSME financing. Over the near term, we expect a meaningful slowdown in AUM growth and look to closely monitor asset quality. Thus, we cut our FY20/FY21 EPS estimates by 4% to factor in the lower growth. Buy with TP of INR350 (2.8x Sep’21 BVPS).
The market headwinds and the conservative approach made its presence felt in decelerating fresh disbursements during Q2FY20 for CIFC. While the same de-grew 14% QoQ, focus on right product mix enabling market share gains in key higher yielding products, HE buoyancy at pre-demo levels and early default indicators enabled CIFC clock healthy AUMs at Rs592bn (PLe: Rs586bn) growing 24%YoY/3%QoQ. Opex remained elevated as Co. stepped- up collection efforts and increased manpower (in select businesses where there’s scope to catch up market share) rightly compensated by stable core (NII healthy 25%YoY/8% QOQ, operating profit up 17%YoY/4%QoQ) and controlled credit costs (0.7% on Stage 3 ECL). While business seasonality saw moderate deterioration in asset quality and funding, H2FY20 should witness trend reversals. We adequately incorporate conservatism in the form of credit costs at 0.9-1.0%, GNPA at 2.75%, AUM 17% growth and NIMs at 6%, expecting stable return profile - RoAs 2.2%/RoE:19% over FY21-22E. CIFC’s strong market positioning across credit/liquidity cycles led by strategic diversification, robust underwriting and healthy liquidity line-up prompt us to reiterate BUY. At Sep-21 PABV, we value CIFC at 3.1x arriving at TP of Rs354.
Yet again, CIFC outperformed across operational parameters, amidst an increasingly tough economic environment. Maintain BUY with a TP of Rs 372 (3.5x Jun- 21E ABV).Growing polarization in the NBFC space (stemming from better parentage and access to funds) has enabled CIFC to sustainably outperform peers across operating metrics. Diversification across products and geographies along with superior underwriting practices and focus on collections pave the way for sustained outperformance. However, with deteriorating macros, asset quality (across asset financiers) will be watched.
We are lowering our EPS estimates for FY20/FY21 by 6%/9%, as we cut volumes/margins for both businesses. The stock trades at ~22.3x/19x FY20E/FY21E consol. EPS. We have lowered P/E multiple for RE from 22.5x to 20x to factor in the step-down in its growth trajectory.Maintain Buy.
While business seasonality saw tad slip-ups and increased BS liquidity and funding costs pressures dented NIMs, H2FY20 should witness yield and asset quality improvement. Despite factoring adequate conservatism in the form of credit costs at 0.9-1.0%, GNPA at 2.75%, AUM 17% growth and NIMs at 6%, we expect RoAs at 2.3% over FY20-21E. We reiterate BUY, reckon CIFC stands better placed to sail across credit/liquidity cycles led by strategic diversification across products and geographies. At Sep-21 PABV, we value the company at 3.1x arriving at TP of Rs322.
We expect Exide to benefit from: 1) an expected improvement in the replacement demand, given healthy primary sales in the past three years, 2) a market share gain from unorganized players, after GST implementation, 3) an uptick in the nascent e-rickshaws /solar battery segments, 4) the initiative to strengthen distribution network through the introduction of the sub-distributor model, and 5) the decline in lead prices (15% YoY), which will improve margin. We expect a 21% EPS CAGR over FY19-21E led by 13% revenue growth (driven by replacement demand) and 70bps margin expansion (due to weak lead prices and measures to cut costs). We recommend a Buy, with SOTP-based TP of ` 277 (20x FY21E EPS + 2x Inv (Rs 37) for the insurance).
The high growth exhibited in Q4 might not repeat ahead; we build in adequate conservatism into our 3-year estimates. Said that, CIFC has sufficient levers in place to stack up overall RoAs to 2.3-2.4% over FY20-21E largely led by lower credit costs trends (0.9%-1.0%) and steady 17-18% AUM traction that should cushion NIMs (6% NIMs on AUMs) over FY20-21E. We reiterate BUY, reckon CIFC as one of the better placed auto financiers sailing successfully across credit and liquidity cycles with clear execution skills, prudent Management cognizant of portfolio quality and strategic product placement aiding growth and margins. At Sep-21 PABV, we value the company at 3.2x arriving at TP of Rs 1,665 (unchanged).
The mgt expects growth to be driven by mkt share gains in the higher yielding used CV and 2-W segments. Margins would not be impacted as yields rise (increase in the share of higher-yielding assets, re-pricing of HE loans) in line with CoF. Asset quality improvement can be expected in both the VF (despite being one of the best) and HE segments as SARFAESI recoveries gather pace. The mgt thus targets pre-tax RoAAs of ~3.6-4%. Maintain BUY with a TP of Rs 1681 (3.25x FY21E ABV of Rs 517).
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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