Cholamandalam Investment and Finance Company Limited Intrinsic Value
CHOLAFIN · Financial Services · Current price ₹1,574.4
Is Cholamandalam Investment and Finance Company Limited undervalued?
We estimate the fair value of Cholamandalam Investment and Finance Company Limited at ₹977 per share, against a market price of ₹1,846. That puts the share price about -47.1% above our estimate, at low confidence. This is our view of what the business is worth, not a target price or a forecast of where the share price will go.
How this fair value is calculated
This estimate comes from 3 methods: Justified P/B (Gordon) (₹977), Residual income (excess return on book) (₹749), Relative P/B (₹1,076). Each is weighted by how well its inputs held up for this company. The full working, including the assumptions and what data was missing, is set out below.
The range around this estimate
Our estimate for Cholamandalam Investment and Finance Company Limited spans ₹749 to ₹1,074. That range is wide, which is the honest signal here: read the range rather than the single number. A margin of safety means buying meaningfully below the estimate: the wider the range, the more room the assumptions leave for error.
Margin of safety
Value investors look for a margin of safety: a discount to estimated value that absorbs being wrong. At ₹1,846 against an estimated value of ₹977, Cholamandalam Investment and Finance Company Limited trades at -47.1%, i.e. a premium to our estimate. How much margin to demand depends on how much you trust the inputs, which is what the confidence band below is for.
How we got this fair value
Every number below is part of the same estimate for Cholamandalam Investment and Finance Company Limited. Nothing here is a target price or a forecast of where the share price will go.
The inputs are thin or the models disagree sharply. This is our least reliable kind of estimate, so read the range rather than the single number.
Estimate range ₹749 – ₹1,074
Why this method for this business
The justified P/B and residual income models are most appropriate for NBFCs, as they focus on sustainable ROE and book value, which are critical for assessing equity value in a capital-light financial services business.
The models behind the number
Each method is weighted by how well its inputs held up for this company.
20% sustainable ROE vs 11.6% cost of equity justifies ~2.7× book
Book value plus the present value of returns earned above the 11.6% cost of equity
- DCF is not suitable for NBFCs due to the high leverage and debt-driven nature of the business
- EV/EBITDA is not relevant for NBFCs as EBITDA is not a reliable measure of cash flow in this sector
What was missing
- Lack of forward EBITDA estimates
- Limited peer data for relative P/B analysis
What drives it
14 inputs, grouped by how strong each claim is
- ROE (normalized)
- 20.2%
- Dividend payout
- 2.7%
- Book value / share
- 357 ₹
- Peer-median P/B
- 3.01×
- Peers used
- 8
- Book value / share
- 357 ₹/share
computed
ratios/derived
reported
peer-median
peer-median
computed
- Cost of equity
- 11.6%
building-block
- Near-term growth g
- 19.6%
- High-growth years
- 10 yrs
- Terminal ROE
- 13.7%
- Terminal growth g
- 5%
computed
building-block
faded toward COE + moat
computed
- Moat
- Narrow
- Excess-return horizon
- 10 yrs
computed
computed
- Justified P/B
- 2.74×
two-stage Gordon
Who computed this
A language model (qwen3:8b) selects the valuation method and the judgement inputs for Cholamandalam Investment and Finance Company Limited: which models suit the business, the moat, the growth and margin assumptions. It does not produce the number. The fair value itself is computed in Python by a deterministic engine (version 2026.08.1) from those inputs, so the same inputs always give the same result and every figure above can be traced to a source.
Estimated 14 Sept 2026. Re-run as new financials and news arrive.
How we value stocks
We estimate what a business is worth from its own economics: cash flows, returns on capital, and a multiple justified by its quality, rather than from where the share price has been. A fair value estimate is a view, not a verdict, and it is only as good as the inputs listed above.
Read the full fair-value methodologyMore on Cholamandalam Investment and Finance Company Limited
DocStoX estimates are computed from reported financials, for informational purposes only, not investment advice. Consult a SEBI-registered advisor before investing.