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ICICI Securities research report on Cholamandalam Finance

Cholamandalam Finance’s (Chola) Q4FY25 performance was broadly in line with highest quarterly PBT-ROTA at 3.6% driven by 30bps QoQ NIM expansion, 10bps QoQ each credit cost and operating expense moderation. Also, for full year FY25, ROA-PBT remained at 3.3% vs 3.4% in FY24, marginal 10bps QoQ decline was largely due to higher credit cost in FY25 at 1.4% vs 1% in FY24. The same was partially offset by 20bps NIM expansion and 10bps reduction in expense ratio. Higher credit cost in FY25 was led by – loan loss provision in CSEL increasing to 5.8% in FY25 (7.1% in Q4FY25) vs 4.4% in FY24, SME to 1% in FY25 (1.4% in Q4FY25) vs 0.4% in FY24 and SBPL to 1.4% in FY25 (2% in Q4FY25) vs 0.6% in FY24.

Outlook

However, management maintains its ~25% AUM growth for FY26 with HL growth at 25–30% YoY and LAP growth at 35-40% YoY and sounded confident about reaching 3.5% PBT-ROTA in FY26. Maintain HOLD with a revised TP of INR 1,500 as we rollover to Sep’26E BVPS and value the stock at 4x PBV.

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Cholamandalam Finance - 29042025 - icici

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