Cholamandalam vs L&T Finance: Which NBFC Stock Has Better Growth Potential?
Citi has announced target prices for two Non-Banking Financial Company (NBFC) stocks, reflecting its view of their future growth and business performance. The companies operate in India’s growing financial services sector and provide loans and other financial solutions to individuals and businesses. Their performance is influenced by factors such as loan growth, asset quality, interest rates, and overall economic conditions.
The target prices provide investors with a reference point to understand Citi’s expectations for these companies. These estimates are based on factors such as financial performance, business outlook, earnings potential, and industry trends. Investors can use the target prices along with the companies’ fundamentals and market conditions to better understand the potential opportunities and risks associated with these NBFC stocks. Here are two Non-Banking Financial Company (NBFC) stocks for which brokerages have announced target prices.
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Cholamandalam Investment & Finance Company Limited
With a market capitalization of Rs. 1,37,031.42 crore, the shares of Cholamandalam Investment & Finance Company Limited were currently trading at Rs. 1,604 per equity share, down nearly 2.17 percent from its previous day’s closing price of Rs. 1,639.65 per equity share.
Citi, a prominent brokerage firm, has recommended a “Buy” call on Cholamandalam Investment & Finance Company Limited with a target price of Rs. 2,100 per share, indicating an upside potential of 30.92 percent from its current price of Rs. 1,604 per share.
Citi is positive on Cholamandalam Investment & Finance, supported by the reaffirmed 20-23 percent AUM growth outlook, with mortgages and newer businesses expected to grow faster than the core vehicle-finance franchise. This diversification should support sustained growth and strengthen the company’s overall business mix.
Despite headwinds from the insurance commission clampdown and higher cost of funds, Citi notes that management has maintained its 3.3-3.5 percent pre-tax ROA guidance. Yield and fee optimization, operating leverage, and disciplined cost management are expected to offset some of the margin pressures and support profitability.
Asset quality remains resilient across segments, with management targeting aggregate net credit losses below 1.5 percent. Citi’s positive stance is therefore supported by the combination of strong AUM growth, improving business diversification, stable asset quality, and multiple levers to protect returns despite near-term cost pressures.
About the Company
Cholamandalam Investment & Finance Company Limited (Chola), part of the Murugappa Group, is a diversified Indian non-banking financial company (NBFC) established in 1978. The company initially focused on equipment financing and has expanded into vehicle finance, home loans, loan against property, SME loans, consumer finance, secured business loans, and loans against securities.
L&T Finance Limited
With a market capitalization of Rs. 69,200.39 crore, the shares of L&T Finance Limited were currently trading at Rs. 276 per equity share, down nearly 1.59 percent from its previous day’s closing price of Rs. 280.45 per equity share.
Citi, a prominent brokerage firm, has recommended a “Buy” call on L&T Finance Limited with a target price of Rs. 380 per share, indicating an upside potential of 37.68 percent from its current price of Rs. 276 per share.
Citi is positive on L&T Finance and maintains a Buy rating, supported by the company’s ongoing structural transformation under Lakshya 2031. Management is expected to monetize multiple mitigation levers to manage emerging risks, while maintaining growth momentum and improving the overall business mix.
Asset quality remains reassuring, with collection efficiency at 99.8 percent and credit cost guidance of 2.0-2.2 percent by exit-FY27 reiterated. At the same time, the NIM + fee guidance of 10.0-10.5 percent remains intact, providing visibility on revenue and margin performance despite potential near-term headwinds.
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Overall, Citi believes execution remains on track, with growth momentum and cost discipline supporting the targeted RoA glide path toward 2.8 percent by end-FY27. While final insurance guidelines remain a key monitorable, Citi expects them to be manageable and not materially disrupt the company’s structural RoA trajectory.
About the Company
L&T Finance Limited (LTF), part of the Larsen & Toubro Group, is a leading Indian non-banking financial company headquartered in Mumbai. The company provides a broad range of retail and rural financial services, including personal loans, home loans, gold loans, two-wheeler loans, business loans, rural finance, farmer loans, and loans against property. LTF has evolved from its earlier infrastructure-finance origins toward a predominantly retail-focused lending model.