KR Choksey has given a positive recommendation for Cholamandalam Investment and Finance Company, with a "BUY" rating and a target price of Rs 1,531 in its latest research report dated October 30, 2024.

The report highlights strong performance for the company, with a net interest income (NII) of INR 27,128 million for Q2FY25, showing a year-on-year growth of 34.6% and a quarter-on-quarter increase of 5.4%. This NII figure exceeded estimates by 3.7%. The pre-provision operating profit reached INR 19,221 million, marking a 35.3% increase year-on-year and a 3.9% rise quarter-on-quarter. Profit after tax (PAT) for the same quarter was reported at INR 9,631 million, up 26.3% year-on-year and 2.2% quarter-on-quarter, also surpassing estimates by 1.2%.

While asset quality has improved slightly, management expects further improvement in the second half of FY25 due to seasonal factors and economic recovery. The report mentions a revised P/ABV multiple of 5.5x for FY26E adjusted BVPS of INR 278.3, resulting in the updated target price of INR 1,531 per share, indicating a potential upside of 18.5%.