The stock ended Tuesday’s session 6.4% higher on the BSE at Rs 1,680.60, as investors responded to the company’s clarification that its operating performance and board-approved business plan remain unchanged.
In a regulatory filing, Cholamandalam Investment and Finance said the performance of the company, its asset quality and its liquidity position “continue to be robust” as disclosed in its audited financial statements for the half year ended September 2025. The company added that there has been no revision to its earlier guidance.
“There is no revision in its guidance provided in the past, and the company will continue to deliver as per its board-approved business plan,” it said.
Addressing allegations around payments and personal benefit, the company said in the filing: “Allegations have also been made that certain individuals are benefitting from the above transactions. The company categorically rejects such statements. All payments to board members, key managerial personnel and senior management personnel of Cholamandalam Investment and Finance Company have been made in compliance with applicable law and have been fully disclosed to the shareholders of the company.”
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The company reiterated that it continues to maintain strong operating metrics, with robust asset quality and a comfortable liquidity position.
Balance sheet strength highlighted
Cholamandalam said its liquidity position remains strong, supported by cash and bank balances of Rs 14,900 crore as of November 30, 2025, while its asset-liability management across time buckets continues to remain positive.
Its capital adequacy ratio stood at 19.79% for the period ended November 30, 2025, with Tier I capital at 14.53%, comfortably above the statutory requirements of 15% for overall CAR and 10% for Tier I capital.
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The company’s net worth stood at Rs 26,783 crore as of November 30, 2025, an increase of more than Rs 3,000 crore over FY25 closing levels. This includes the conversion of Rs 300 crore of compulsorily convertible debentures issued in FY24. The balance Rs 1,700 crore of CCDs is expected to be converted over the next three quarters, which the company said will further strengthen its capital base.
On operational matters, the company clarified that cash collections are largely from small road transport operators and self-employed borrowers across rural and semi-urban India, who typically transact in cash. These collections are deposited with banks and are fully compliant with KYC, income tax norms, internal controls and statutory audits.
It added that related-party transactions are carried out strictly in line with legal and accounting requirements and are fully disclosed in financial statements. These include insurance premiums paid to group entities and payments for manpower, IT, strategic services and working capital support. Allegations of personal benefit to individuals were again denied.
Motilal Oswal: fundamentals intact, turnaround ahead
Motilal Oswal reiterated its ‘Buy’ rating on the stock with a target price of Rs 2,000, saying the company has refuted the allegations and that its franchise fundamentals remain intact.
The brokerage highlighted that the company’s capital position remains strong, with net worth expected to increase by around Rs 2,500 crore from FY25 levels, supported by CCD conversions already completed and those expected over the next three quarters.
Motilal Oswal also pointed to improving business momentum, noting that the current quarter has been strong in terms of disbursements across vehicle finance and home loans. It expects the December quarter to mark a turnaround, with the second half of FY26 likely to be seasonally strong.
Morgan Stanley: robust financial health, improving disbursements
Morgan Stanley maintained an ‘Equal-weight’ rating with a target price of Rs 1,540, noting that the management has maintained that its processes are legal, audited and compliant, while financial health, asset quality and liquidity remain robust.
The brokerage noted that disbursements have improved in the third quarter, with vehicle finance and home loans seeing a pickup. Management, it said, expects a decent quarterly performance.
Morgan Stanley also flagged that cash collections have declined to about 15% from around 50% historically, reflecting a structural shift in the business. It expects asset quality to improve in the second half of FY26, though its FY27 profit estimate remains about 10% below consensus.
Jefferies: growth visibility strong, Buy reiterated
Jefferies maintained its ‘Buy’ rating with a target price of Rs 1,980, saying the governance-related allegations appear misplaced and that the company has rejected claims around cash deposits, related-party transactions and payouts.
The brokerage said cash EMI collections are intrinsic to the borrower profile and noted that such collections have fallen sharply over the past decade. It added that related-party transactions are disclosed and reflect normal business operations, while payments to agencies and non-government organisations are in line with industry practice.
Jefferies said management has guided for strong third-quarter disbursements and expects growth to be driven by a recovery in auto demand, a revival in MSME lending and net interest margin expansion. It expects more than 30% EPS growth in FY27 and continues to count Cholamandalam Investment and Finance among its preferred picks.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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