Cholamandalam Investment and Finance Company Limited (NSE:CHOLAFIN): What We Can Expect From This Growth Stock

In March 2018, Cholamandalam Investment and Finance Company Limited (NSE:CHOLAFIN) released its most recent earnings update. Generally, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 27.80% in the upcoming year against the past 5-year average growth rate of 24.62%. Presently, with earnings at ₹9.75b, we should see this growing to ₹12.47b by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. Investors wanting to learn more about other aspects of the company should research its fundamentals here. View out our latest analysis for Cholamandalam Investment and Finance

How will Cholamandalam Investment and Finance perform in the near future?

Longer term expectations from the 14 analysts covering CHOLAFIN’s stock is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
NSEI:CHOLAFIN Future Profit July 16th 18
NSEI:CHOLAFIN Future Profit July 16th 18
From the current net income level of ₹9.75b and the final forecast of ₹17.82b by 2021, the annual rate of growth for CHOLAFIN’s earnings is 17.85%. EPS reaches ₹114.03 in the final year of forecast compared to the current ₹62.41 EPS today. Growth in earnings appears to be a result of a higher revenue growth of 18.93% outpacing cost increases. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 34.10% to 31.59% by the end of 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Cholamandalam Investment and Finance, there are three essential factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Cholamandalam Investment and Finance worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Cholamandalam Investment and Finance is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cholamandalam Investment and Finance? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!