Mehabe score: 3 G Factor: 5 Piotski Score: 4 The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 5 and Piotski score of 4.
Description
Cholamandalam Investment & Finance Company is one of the premier diversified non-banking finance companies in India, engaged in providing vehicle finance, home loans and Loan against property.#
Main Points
Ratios (FY20)
Capital Adequacy Ratio – 20.7%
Net Interest Margin – 6.8%
Gross NPA – 3.8%
Net NPA – 2.2%#Site:CHOLAFINMain Symbol:CHOLAFIN
Stock trades at 519.0, below its 50dma 538.47. However it is trading above its 200dma 458.83. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 538.47.
The 52 week high is at 600.95 and the 52week low is at 195.80
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 21.48% CAGR over last 5 years
-‘s median sales growth is 18.44% of last 10 years
Weakness
– Stock is trading at 4.44 times its book value
– has low interest coverage ratio.
– might be capitalizing the interest cost
Competition
– The industry trades at a mean P/E of 24.5x. SBI Cards trades at the industry’s max P/E of 93.15x. CHOLAFIN trades at a P/E of 28.0x
– Industry’s mean G-Factor is 4.6 while the mean Piotski score is 6.0. CHOLAFIN has a G-Factor of 5 and Piotski scoreof 4.
– Average 1 month return for industry is -0.9%. The max 1- month return was given by Bajaj Finserv: a return of 7.18 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 2479.0 cr compared to Rs 2165.0 cr for period ended Mar 2020, a rise of 14.5%
Operating Profits reported at Rs 1007.0 cr for period ended Mar 2021 vis-vis 945.0 for period ended Mar 2020 .
Operating Margins contracted -302.8 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 2.99 compared to Rs 5.0 for previous quarter ended Dec 2020 and Rs 0.52 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 9583.0 cr for period ended Mar 2021 vis-vis sales of Rs 8712.0 cr for the period ended Mar 2020, a growth of 9.1%. The 3 year sales cagr stood at 19.9%.
Operating margins expanded to 2150.0% for period ended Mar 2021 vis-vis 1699.0% for period ended Mar 2020, expansion of 45100.0 bps.
Net Profit reported at Rs 1521.0 cr for period ended Mar 2021 vis-vis sales of Rs 1054.0 cr for the period ended Mar 2020, rising 30.7%.
Company recorded a healthy Net Profit CAGR of 18.3% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 17.0% compared to 17.0% over the last 3 Years. – The stock has given a return of 149% on a 1 Year basis vis-vis a return of 18% over the last 3 Years. – The compounded sales growth on a TTM bassis is 10% vis-vis a compounded sales growth of 20% over the last 3 Years. – The compounded profit growth on a TTM basis is 44% vis-vis a compounded profit growth of 18% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has risen for the period ended Mar 2021. The Mar 2021 fii holding stood at 16.49% vis-vis 13.17% for Dec 2020 – Public shareholding has remained largely constant. The Mar 2021 public holding stood at 7.46% vis-vis 7.82% for Dec 2020
Conclusion
– has delivered good profit growth of 21.48% CAGR over last 5 years
-‘s median sales growth is 18.44% of last 10 years – Stock is trading at 4.44 times its book value
– has low interest coverage ratio.
– might be capitalizing the interest cost
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 538.47 and is trading at 519.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
