FINLATICS RESEARCH PROJECT

Company 2: Cholamandlam Investment and Finance Company

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 1029 branches across India with assets under management above INR 59,292
Crores. The subsidiaries of Chola are Cholamandalam Securities Limited (CSEC) and Cholamandalam
Home Finance Limited (CHFL).

The vision of Chola is to enable customers enter a better life. Chola has a growing clientele of over 8 lakh
happy customers across the nation. Ever since its inception and all through its growth, the company has
kept a clear sight of its values. The basic tenet of these values is a strict adherence to ethics and a
responsibility to all those who come within its corporate ambit - customers, shareholders, employees and
society.

Chola’s mission can be categorized into 3 main heads as follows:

1) Customer first: Switch from product focused to customer focus.

2) Improving Efficiencies: Long term Customer focus requires profitability and sustainability.

3) People Power: People are Primary Asset. Happier people = Happier Customers.
BOARD OF DIRECTORS
SWOT Analysis of CHOLAFIN

STRENGTHS:

1) Unique and sound business model, presence in high yield, high growth business segments and
superior sustainable returns.

2) Most diversified asset financier both in term of products as well as geographies, which helps
mitigate risks.

3) CIFC has invested heavily on technology as a strategic enabler which has helped it to race
ahead of peers

WEAKNESS:

1) Operates in a high risk segments particularly in pre- owned commercial vehicles. Asset
quality in these segments remains susceptible to volatility.

2) Dependence on wholesale funding is high. The company is trying to reduce this by exploring
the NCD route

3) The customer segment it caters too does not have adequate documentation

OPPORTUINTIES:

1) Operates in business segments with huge growth potential and is adequately capitalized to
maintain business momentum

2) Forayed into SME and home loan segment, both of which offer huge potential

THREATS:

1) CIFC operates in lucrative high yielding segments which could attract stiff competition from
small finance banks and other specialized NBFC

2) In case of economic slowdown or dip in income levels, NPA accretion could be high

3) Changes in regulatory guidelines could impact the business performance

FUNDAMENTAL ANALYSIS OF CHOLAFIN

The Fundamental analysis above suggests that cholafin has been repetitively providing its
shareholder with increasing returns as EPS year on year. In a span of just 2 years, the EPS has
risen from 46 to 70.6 per share. The P/E and the P/B ratio of chola are an indication that the
share price has corrected valuation over the years. Speaking of its operations, CHOLA has been
able to register increasing profits over the years and a higher PAT value is an indication of more
rewards to the investors.
TECHNICAL ANALYSIS

The above figure is for 1 hour chart of CholaFin. As can be seen by the RSI, the share has been
generally placed in the oversold position and has now started rising. This means that Cholafin
will now deliver more capital appreciation as it moves to the overbought zone, which in the
current economic scenario will be reached gradually.