01 — At a Glance
The Murugappa Money Machine: Still Humming, But Slightly Stalling
- 52-Week High / Low₹1,832 / ₹1,359
- Q3 FY26 Revenue (₹ Cr)7,898
- Q3 FY26 PAT (₹ Cr)1,290
- Q3 FY26 EPS (₹)15.28
- Annualised EPS (Q3×4)61.12
- Book Value307
- Price to Book5.29x
- Dividend Yield0.12%
- Debt / Equity7.23x
- GNPA Ratio3.4% (Dec 2025)
Auditor’s Opening Note: Cholamandalam Investment & Finance closed Q3 FY26 with ₹227,770 crore AUM, a 20% YoY growth rate that’s visibly slowing from 37% (FY24) and 27% (FY25). Disbursements at ₹29,962 crore (+16% YoY) mark a tangible deceleration from 33% and 87% in prior years. Q3 EPS of ₹15.28 annualizes to ₹61.12, making the current P/E of 28.6x seem… let’s say “optimistic.” The GNPA just crept to 3.4% (from 2.5% a year ago), and NCL in vehicle finance is hovering near 2%. The bull narrative is intact. The bear case is getting harder to dismiss.
02 — Introduction
The Company That Finances Your Tractor, Your Car, And Your Dreams Of Homeownership
Let’s introduce Cholamandalam Investment & Finance (CIFCL). Owned by the Murugappa Group — a 125-year-old Chennai-based conglomerate worth $9.3 billion with 29 businesses and 83,000+ employees — CIFCL is a non-banking finance company (NBFC) that does one thing supremely well: lending against collateral.
Vehicle finance (54% of AUM). Home loans (10%). Loans against property (20%). A smattering of unsecured personal loans, SME term loans, and gold loans. Nothing glamorous. No fintech moonshots. No AI disruption narratives. Just capital-efficient lending to retail and small business customers across India’s Tier 3, 4, 5, and 6 towns — the places where banks still don’t have branches but everyone needs cash.
For 15+ years, this playbook has delivered 20% annualised returns to equity holders, 45%+ ROE, and a ROCE that, while moderating, still sits comfortably at 10.3%. The stock has compounded at 28% CAGR over a decade. The dividend yield is negligible, but that’s because profits are ploughed back. This is the story of a machine that prints money in bad times and prints more in good times.
But here’s the twist. Starting Q2 FY25, GNPA ratios ticked up. Vehicle finance credit costs hardened. Disbursement growth fell off a cliff. The easy phase of Indian lending — where growth and spreads both expanded — is looking increasingly behind us. Now comes the harder phase: growing in a saturated market while credit quality deteriorates. Let’s break down what’s real and what’s narrative.
Concall Context (Feb 2026): Management explicitly acknowledged “elevate VF credit cost” but signaled stabilization: “Stage 3 has got the stability now” and “credit costs have stabilized, and we are looking at a reasonable moderation in Q4.” Translation: Peak pain is in the rear-view mirror, but the question is whether it was a speed bump or the start of a crater.
03 — Business Model: The Geography That Matters
Finance The Unfunded. Scale It. Dominate. Repeat.
CIFCL operates 1,757 branches as of December 2025, up from 1,145 in FY22 — a 53% expansion in just three years. About 82% of those branches are in rural areas. Think Tier 3, 4, 5, 6 towns. Places where the Reserve Bank’s “branch in every 20,000 people” guideline still leaves vast gaps. CIFCL has essentially built the last-mile lending infrastructure for India’s interior.
Vehicle finance dominates at 54% of AUM (though down from 74% in FY22). They lend for everything: light commercial vehicles (LCVs; think last-mile deliveries), heavy commercial vehicles (HCVs; trucking), passenger vehicles, two-wheelers, tractors, construction equipment, and used vehicles. The used vehicle segment alone is 27% of their vehicle portfolio — a captive source of repeat lending because farmers and small operators cycle equipment frequently.
But the real story is diversification. Home loans (₹18,000+ crore AUM) grew 187% between FY22 and FY24. Loans against property (LAP) grew 97%. These are higher-yielding, better-collateralised assets. In Q3, disbursements broke down as: VF +17% YoY, LAP +26%, HL +10%, SBPL (Secured Business & Personal Loans) +30%, unsecured -9% (due to fintech exit). The mix is shifting from growth-at-all-costs to quality-focused expansion.
Vehicle Finance54%Of AUM (Dec 2025)
Home Equity23%Fastest growing segment
Home Loans10%Affordable housing focus
Other12%SBPL, CSEL, SME, Gold
The Unsecured Question: CIFCL stopped fintech-originated lending in Q1 FY26. This triggered a YoY decline in unsecured book, but management reframed it as deliberate quality tightening. Traditional DSA/DST unsecured runs at ₹700 cr/month; Samsung Finance Plus adds ₹150+ cr/month for durables. Come Q1 FY27, the fintech base effect falls away and growth resumes. Whether that resumption sticks depends entirely on underwriting discipline.
💬 Have you ever used NBFC lending? Do you know who your lender actually is, or does your dealer hide that detail?
04 — Financials Overview
Q3 FY26: The Quarterly Snapshot
Result type: Quarterly Results | Q3 FY26 EPS: ₹15.28 | Annualised EPS (Q3×4): ₹61.12 | Full-year FY25 EPS: ₹50.69
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 7,898 | 6,733 | 7,491 | +17.3% | +5.4% |
| Interest Income | 3,646 | 3,275 | 3,517 | +11.3% | +3.7% |
| Operating Profit | 1,698 | 1,420 | 1,514 | +19.6% | +12.2% |
| OPM % | 21.5% | 21.1% | 20.2% | +40 bps | +130 bps |
| PAT | 1,290 | 1,088 | 1,160 | +18.5% | +11.2% |
| EPS (₹) | 15.28 | 12.94 | 13.78 | +18.1% | +10.9% |
The P/E Math: Annualised EPS from Q3 (₹61.12) ÷ CMP (₹1,626) = P/E 26.6x. Screener shows 28.6x (likely using full-year FY25 EPS of ₹50.69). CIFCL’s industry median is 17.7x. The stock trades at ~61% premium to peers. Revenue growth is solid at 17.3% YoY, PAT growth at 18.5%. Operating margins improved 40 bps YoY due to NIM expansion (RBI rate cuts lowered funding costs). The question is: Can profitability growth keep pace with valuation expansion?
05 — Valuation: What’s Fair?
28.6x P/E for an NBFC Growing at 18% — Expensive or Fair?
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