Cholamandalam Finance (CIFC IN) Q1FY18 Earnings First Cut: Strong performance continues; Asset quality stable qoq under 90-dpd regime

Net interest income +24% yoy (+4% qoq) to Rs6.9bn – in line with estimates
Opex +23% yoy (+1% qoq) – lower than estimates on lower employee costs
Operating profit +25% yoy (+7% qoq) at Rs4.2bn – 4% above estimates
Provisions +22% yoy (+85% qoq) – annualized credit costs stood at 1.1%
Tax rate came in at 35%
PAT +25% yoy (-6% qoq) at Rs2.07bn – 3% above estimates
Gross NPLs stable qoq at 4.7% (90-dpd basis) – despite Q1 being seasonally weak quarter for NBFC asset quality
Disbursements +6% yoy (-7% qoq) at Rs48.5bn mainly led by +15% yoy (-13% qoq) growth in vehicle disbursements. Meanwhile LAP disbursements grew +36% qoq.

Post results conference call scheduled on 28^th July 2017 at 12pm. Dial-in: 91 22 3960 0611 / 3940 3977.

At Rs1,190, the stock trades at 3.1x FY19E BV and 16x FY19E EPS. We currently have an ACCUMULATE rating on the stock with a target price of Rs1,350.