Cholamandalam Investments & Finance Stock Analysis

4 min read
In this article, we are going to analyse the company Cholamandalam Investment & Finance Co Ltd based on its business, major shareholders, customer base, loan book mix and key financial indicators of the company etc.

Detailed Share Analysis


In this article, we are going to analyse the company Cholamandalam Investment & Finance Co Ltd based on its business, major shareholders, customer base, loan book mix and key financial indicators of the company etc.

Cholamandalam Investment & Finance Co Ltd – Stock Analysis

Company Profile

  • Cholamandalam Investment and Finance Company Limited (Chola), incorporated in 1978 as the financial services arm of the Murugappa Group.
  • Chola commenced business as an equipment financing company and has today emerged as a comprehensive financial services provider offering vehicle finance, home loans, home equity loans, SME loans, investment advisory services, stock broking and a variety of other financial services to customers.
  • Chola operates from 900 branches across India with assets under management above INR 54,279 Crores.
  • The subsidiaries of Chola are Cholamandalam Securities Limited (CSEC) and Cholamandalam Home Finance Limited (CHFL).

Geographical Presence

  • The company is present in 27 states and the largest revenue generating state is Maharashtra. The total contribution of Maharashtra in the revenue-mix of Chola Investments is around 12%. The second most contributing state is Tamil Nadu, which generates 8% of the total income.
  • The above statistics shows the level of diversification the investment firm has reached and that it is not dependent on a particular region or state.
  • Among the 27 states in which Chola is present, it majorly focuses on Tier III and Tier IV cities which accounts for around 82% of their total demographics.
  • A positive factor for Chola is that penetration of new players is relatively difficult in tier III & IV compared to tier I and tier II cities.

Customer Base

  • The customer base of Chola Investment and Finance Company stands at 8 Lakhs compared to 2 Lakh in the year 2000.
  • Although the growth seem muted, but one must understand that, with the growing economy average ticket size also increases and hence the existing customers also provide greater business to the company. (Average ticket is a metric that provides details on the average amount of sales by a given customer. It is used by a range of businesses when analysing business performance and sales activity)

Company Growth

  • The growth of the company can be properly understood by the growth of employees which increased from 200 in Year 2000 to more than 23,000 employees in Year 2019.
  • Another parameter, Market Capitalization, has also shown a significant growth. Market cap of Chola in 2000 was Rs. 840 Crores, whereas in 2019 it’s more than Rs. 22,000 Crores, i.e. Market Cap grew more than 25 times.

Shareholding Pattern

  1. Promoters :
    • Promoters’ % shareholding is 53%. Such a high Promoter stake in a company is always a positive sign as it shows the trust placed by the promoters in their own company.
    • Unlike in Banks where, according to RBI guidelines, every institution’s promoter must bring down their stake eventually to less than 10%, NBFCs and other Financial Institutes have no such restriction.
    • Also, there is no promoter pledging which is again a positive sign that the company does not need to put their shares at stake to borrow money from the market.
  2. FIIs : FIIs holding in the company is about 19%.
  3. Institutional investors :
    • Institutional investors is having 21% holding.
    • Most of the Mid cap funds have invested in Cholamandalam Investment and Finance Company Ltd. with a predominant % allocation for the stock in their portfolios.
    • It is the top holding stock in many Mid cap funds like ‘HDFC Midcap Opportunities Fund’ which is managed by star fund manager Mr. Chirag Setalvad. It is a very popular and great performing fund among the institutional investors.
    • Due to the same reason, Cholamandalam Investment and Finance Company Ltd. is getting a lot of confidence from these institutional investors. Thus, many fund houses have a significant allocation for the company.
  4. Public : Almost 93% (53+19+21) stake of the company is locked in for long term, leaving only 6% to 7% shares for general public.

Loan Book

  • The company has a total loan book of Rs. 54,000 crores with 3 major segments.
  • Vehicular Finance :
    • Out of the total loan book, nearly Rs. 40,500 crores ie. 74%, is invested in Vehicular Finance.
    • The company has a well-diversified portfolio in Commercial vehicle finance, which is focusing on high yield segments with diversified customer base (HCV, LCV, Car & MUV) and exploring new segments like three-wheelers and used vehicles.
  • Home Equity :
    • It also has a significant Loan book share in Home-Equity which is nothing but Loan against property. This constitutes of nearly 21% of the loan book.
    • Out of 21% of Home equity, majority percentage (Around 82%) is of Self Occupied Residential Property (SORP). These loans have very low risk of defaulting.
  • Other Loans :
    • The remaining 5% share of the loan book majorly comprises of Home loans, SMEs, Agri loans etc.


  • ROCE (Return on Capital Employed) = 11.59%
  • ROE (Return on Equity) = 20.5%
  • P/E ratio = 18.69, which is a very attractive valuation.
  • Profitability of the company in the last 3-5 years is growing at a CAGR of 29-30%
  • From a financial perspective, the company has very healthy numbers which they have maintained and also improved.
  • The business prospects of the company are strong.

Notes: –

  • The numbers that are used are approximate and have been rounded for presentation purposes.
  • We are not in any way saying that this is a bad company or that the stock of this company is bad.
  • We are also not suggesting anyone to immediately go and buy this stock or invest in the stock markets.
  • Only an analysis has been presented here. No judgments or final statements are being made here.

2 thoughts on “Cholamandalam Investments & Finance Stock Analysis

  1. Sir analysis of stock very good and easy to understand, but what is real market price, and when to buy. How to know it’s reasonably priced?
    Thanks Sunil

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