Cholaman.Inv.&Fn (CHOLAFIN)

FairStock Score: 51/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• ROE of 20.48% with sales growth of 22.68% and profit growth of 19.14% shows strong compounding.
• Promoter holding of 49.25% aligns ownership and suggests long-term commitment.
• Latest quarterly net profit of ₹1,290 crore on sales of ₹7,898 crore demonstrates solid earnings power.
• Piotroski F-score of 7/9 reflects reasonably healthy fundamentals and operational discipline.

Concerns

• Valuation is rich: P/E of 30.42, P/B of 5.55, and Graham Number of ₹603.82 imply a negative 186% margin of safety.
• High leverage with debt/equity of 7.40; ROCE of 10.34% versus ROE of 20.48% shows returns are heavily debt-amplified.
• Free cash flow is deeply negative at ₹-35,361 crore, leaving no cash buffer.
• Altman Z-score of 1.03 and EV/EBITDA of 808.08 signal financial and valuation stress; PEG of 2.88 means growth is already priced in.

AI Analysis

At first glance, Cholamandalam Investment and Finance has the numbers of a quality compounder: return on equity of 20.48 percent, sales growth of 22.68 percent, profit growth of 19.14 percent, latest quarter net profit of ₹1,290 crore, and promoters holding nearly half the company. That earns respect. But investing is about price, and here the market has already given this business a very high score. I am being asked to pay ₹1,542.65 per share, or 30.42 times earnings and 5.55 times book value. Benjamin Graham would compute a rough intrinsic number using earnings and book value; that Graham Number comes to only ₹603.82. Against the current price, the margin of safety is negative 186 percent. That is not a margin; it is a warning. The leverage concerns me too: debt to equity of 7.40 times, and return on capital employed of only 10.34 percent, while return on equity is 20.48 percent. The gap is amplified by debt, not by effortless operations. Free cash flow is minus ₹35,361 crore; for a growing lender that can simply reflect new loans rather than true cash burn, but it still leaves no cushion for trouble. The Altman Z-score of 1.03 and an EV/EBITDA of 808 are red flags in any conventional analysis. The Piotroski score of 7 is fine, but it does not fix the price. This is a good business at an excessive price. As Graham said, price is what you pay, value is what you get. I would wait for a better day or a better price.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer