Cholamandalam Investment and Finance Company (Chola Invest) shares are in the spotlight following strong Q3 results, with mixed reactions from major brokerages. Jefferies remains the most bullish, projecting a 28% upside, while CLSA maintains an Outperform rating. Morgan Stanley (MS), however, remains cautious, highlighting potential cyclicality in future earnings. The stock is currently trading at ₹1,291.15.
Jefferies has reaffirmed its Buy rating on Chola Invest with a target price of ₹1,650, implying a 28% upside from current levels. The brokerage highlighted that Q3 profit after tax (PAT) stood at ₹10.8 billion, marking a 24% year-on-year growth and 3% above estimates, driven by higher direct assignment (DA) income. Auto disbursement growth improved, while the non-auto segment continued to show strong momentum. Jefferies also noted that net interest margins (NIMs) rose quarter-on-quarter and could expand further if interest rates are cut. While auto gross non-performing assets (GNPA) remained stable, there was a rise in GNPA in the unsecured segment. Nevertheless, asset quality trends are improving, and the company expects stable credit costs in Q4 with a further decline anticipated in FY26. Jefferies forecasts a 28% EPS CAGR and 20% ROE over FY25-27.
CLSA has maintained an Outperform rating with a target price of ₹1,500, indicating a potential 16% upside. The brokerage praised Chola Invest’s healthy AUM growth of 30%, with stable margins despite a slight increase in provisions. CLSA pointed out that while the company’s fundamentals remain strong, credit costs are still elevated, which could weigh on near-term profitability. However, the consistent growth trajectory and stable operational performance continue to support CLSA’s positive outlook.
On the more cautious side, Morgan Stanley (MS) has maintained an Equal Weight rating with a target price of ₹1,430, implying an 11% upside. MS expects cyclicality to weigh on earnings growth in FY26 and FY27 and forecasts are below consensus by 8% for FY26 and 14% for FY27. While MS projects a 19% EPS CAGR and an average ROE of 18.5% over FY25-27, it believes the valuation is stretched at 18x FY27 P/E and 3.0x price-to-book (P/B), suggesting limited upside potential from current levels.
Chola Invest’s robust growth in both auto and non-auto segments, along with improving asset quality, has fueled optimism among brokerages like Jefferies and CLSA. However, concerns about elevated credit costs and future earnings cyclicality keep Morgan Stanley cautious about the stock’s long-term trajectory.
(Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should consult their financial advisors before making any investment decisions.)
