MOSL: CHOLAMANDALAM INV & FIN (Buy)-Margins stable, AUM growth steady across segments
Cholamandalam Inv & Fin: Margins stable, AUM growth steady across segments
(CIFC IN, Mkt Cap USD2.6b, CMP INR1174, TP INR1525, 30% Upside, Buy)
- Cholamandalam Investment and Finance (CIFC) reported 3QFY19 PAT of INR3.04b (+39% YoY), largely in line with our estimate. This was driven by a stable sequential NIM and cost control.
- Disbursements grew at a steady pace of 13% YoY to INR76.5b. VF disbursements grew by 11% YoY, largely driven by LCV (+11% YoY) and 3W&SCV (+67% YoY). HE disbursements picked up to 19% YoY. Overall, AUM growth remained robust at 29% YoY.
- Spreads remained stable on a YoY basis, while increasing on a sequential basis by 20bp to 6.7%. This was driven by higher share of LCVs and used vehicles and lower share of HCVs in the product mix, which led to yield expansion of 50bp QoQ. However, cost of funds increased 40bp QoQ.
- Costs were managed well, which led to an opex growth of 12% YoY. Given opex growth was slower than income growth, it led to C/I ratio decline of 300bp YoY. Also, credit costs were lower by 20bp YoY to 0.8%.
Cholamandalam Investment and Finance Company Limited is a diversified non-banking finance company. The Company provides vehicle finance, home loans and corporate mortgage loans, small and medium enterprises (SME) loans, investment advisory services, stock broking and a range of other financial services. The Company focuses on vehicle finance, corporate finance, home equity loans and distribution of financial products. The Company operates from over 530 branches across India. The Company also offers Rural and Agri Loans, which include loans for purchase of tractors and farming equipment; wealth management, which includes mutual funds, fixed deposits and bonds, life and general insurance, and home loan, and securities, which include stock and derivatives, Internet broking, demat services, exchange traded funds and bonds. Its subsidiaries include Cholamandalam Securities Limited, Cholamandalam Distribution Services Limited and White Data Systems India Private Limited.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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