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As Cholamandalam Investment and Finance Company Limited (NSE:CHOLAFIN) announced its earnings release on 31 March 2019, analyst forecasts seem fairly subdued, with earnings expected to grow by 18% in the upcoming year compared with the higher past 5-year average growth rate of 26%. Presently, with latest-twelve-month earnings at ₹12b, we should see this growing to ₹14b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Cholamandalam Investment and Finance to keep growing?
Over the next three years, it seems the consensus view of the 15 analysts covering CHOLAFIN is skewed towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, CHOLAFIN's earnings should reach ₹18b, from current levels of ₹12b, resulting in an annual growth rate of 14%. This leads to an EPS of ₹117.78 in the final year of projections relative to the current EPS of ₹76.56. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 34% to 34% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Cholamandalam Investment and Finance, I've compiled three important factors you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Cholamandalam Investment and Finance worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Cholamandalam Investment and Finance is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Cholamandalam Investment and Finance? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.