Cholamandalam Investment & Finance Company downgraded to 'Hold' by MarketsMOJO

Cholamandalam Investment & Finance Company, a largecap finance company, has recently been downgraded to a 'Hold' by MarketsMOJO. This decision was based on the company's strong long-term fundamental strength, with an average Return on Equity (ROE) of 17.03%. The company has also shown healthy long-term growth, with net sales growing at an annual rate of 22.98% and operating profit at 20.50%.
In addition, Cholamandalam Investment & Finance Company has declared positive results for the last 8 consecutive quarters, with its PAT (HY) growing at 29.14% and its NET SALES (Q) reaching a high of Rs 6,255.12 crore. The company's PBDIT (Q) has also reached a high of Rs 4,358.19 crore.

However, the technical trend for the stock is currently sideways, indicating no clear price momentum. The technical trend has also deteriorated from mildly bullish on 04-Nov-24, generating -2.71% returns since then.

One positive aspect for the company is its high institutional holdings at 43.75%. These investors have better capability and resources to analyze the fundamentals of companies compared to most retail investors. Additionally, Cholamandalam Investment & Finance Company is among the highest 1% of companies rated by MarketsMojo across all 4,000 stocks.

Despite these strengths, the company's ROE of 18 indicates an expensive valuation with a 4.9 price to book value. The stock is currently trading at a premium compared to its average historical valuations. In the past year, while the stock has generated a return of 10.27%, its profits have only risen by 27.4%, resulting in a PEG ratio of 1.1.

Furthermore, Cholamandalam Investment & Finance Company has underperformed the market in the last 1 year, with a return of 10.27% compared to the market's (BSE 500) return of 31.79%. Based on these factors, MarketsMOJO has downgraded the stock to a 'Hold'.