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Small brokerages to billion dollar asset managers are betting on this midcap stock

After Cartica Management LLC, which manages more than $3 billion of assets globally said that it’s taking exposures to Cholamandalam Investment and Finance company last week, Kunj Bansal of Centrum Wealth Management is also bullish on the stock.

Small brokerages to billion dollar asset managers are betting on this midcap stock
Prestige Estate, Coffee Day among 10 midcap stocks to bet on in 2016: After giving phenomenal return of around 50 per cent in 2014-15 and double-digit return of nearly 14 per cent in 2013-14, the BSE Midcap index closed down 1.2 per cent for the year financial year ended March 2016.

After Cartica Management LLC, which manages more than $3 billion of assets globally said that it’s taking exposures to Cholamandalam Investment and Finance company last week, Kunj Bansal of Centrum Wealth Management is also bullish on the stock. In an interview to CNBC TV18, the ED and CIO at Centrum Wealth Management said, “The company (Cholamandalam)  has been doing reasonably well. A large part of the business comes from vehicle financing, which has been the old traditional business. The return on assets are close to 3%, and is currently available at 3.6 forward price-book. The gross NPAs have been continuously coming down in the last four quarters. The Net Interest Margin growth has been in double digits.”

The expert says that both the valuation and fundamentals augur well for the company currently. “We feel that taking the valuation and also the fundamentals looks like a good investment, certainly for the medium term.” Kunj Bansal says that if the NBFC space continues to see the traction it’s currently undergoing, the stock can do well in the shorter term as well.

Earlier last week, Teresa Barger, the co-founder and CEO of Cartica Management said that she’s positive on the stock given the integrity of the founders. She told ET Now, “We only go into high quality companies with high integrity sponsors.” So we are in admiration of the Murugappa group. This is like a negative screener for us.” Elaborating on the positives of the company, she said, “It’s (Cholamandalam) niche in the market. Its ability to use data on where it’s going in terms of new products. They are growing with smaller footprint, we like the access to the SMEs, along with their superior credit processes.”

Cholamandalam Finance commenced business as an equipment financing company and has forayed into vehicle finance, home loans, home equity loans, SME loans, investment advisory services, stock broking and a variety of other financial services. According to the company’s website, Cholamandalam operates from 703 branches across India with assets under management above INR 35,000 Crore. The shares closed at Rs 1,163.05, down by more than 0.5% since the previous close.

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