Cholamandalam Investment & Finance Company (CIFC), part of the Murugappa Group is one of the dominant players in the Vehicle Finance business with a market share of ~9%. Focused business model, strong management and high corporate governance standards are the key differentiating parameters of CIFC. Cholmandalm is best placed to play the revival in CV cycle in India. With the pain of demonetization getting over, we expect gradual uptick in freight availability and consequent CV sales. Further, the lower interest rate regime could fuel a growth in passenger vehicle and tractor business. Currently the stock trades at 3.2x its FY2019E ABV. We recommend BUY on the stock with a target price of ₹1,230.
