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'Too Fast, Too Soon': Citi downgrades Cholamandalam citing 50% rally in 2023

Citi had initiated coverage on the stock with a buy rating and a price target of Rs 930 in March this year, which it later raised to Rs 1,120 in May.

By CNBCTV18.com Jun 27, 2023 11:06:55 AM IST (Published)

2 Min Read
Brokerage firm Citi has downgraded the stock of financial service provider Cholamandalam Investment and Finance Company Ltd. to neutral from its earlier rating of buy. However, it has raised its price target on the stock to Rs 1,200 from Rs 1,120 earlier. The revised price target implies a potential upside of 11 percent from Monday's closing.
Citi is of the view that the stock re-rating "too fast, too soon" prompting the downgrade. Shares of Cholamandalam have risen nearly 50 percent so far this year.
The brokerage is of the view that the scale-up of the non-vehicle business has driven the stock's outperformance during 2023. This has also led to a re-rating of the stock's peak multiple to 4.2 times financial year 2025 book and 21 times Earnings Per Share (EPS).