Cholamandalam Inv refutes Cobrapost claims; Analysts retain 'Buy' call

Analysts at Jefferies, and Motilal Oswal Financial Services (MOFSL) have retained their 'Buy' rating on Cholamandalam Investment and Finance Company (CIFC) after the company’s management rebutted allegations made by investigative agency Cobrapost.

 

The Cobrapost report had alleged large-scale related-party transactions, cash-handling irregularities, governance lapses, and regulatory non-compliance at CIFC.

 

In response, CIFC’s management promptly refuted the claims, describing them as “malicious, distorted, and motivated,” and asserting they lacked any factual or regulatory basis.

 

“CIFC remains a robust franchise, with an expected compound annual growth rate (CAGR) of 20 per cent in assets under management (AUM) and 25 per cent in profit after tax (PAT) over FY25-28, alongside projected RoA/RoE of 2.7 per cent/20 per cent in FY28,” said MOFSL in its report.

 

 

The brokerage has set a target price of ₹2,000 for the stock, based on 4x December 2027 estimated BVPS. Meanwhile, CIFC shares were trading at ₹1,695 apiece at 09:40 AM on Wednesday, up nearly 1 per cent from the previous close of ₹1,678.50 on the NSE.  ALSO READ | Coal India rallies 7% in 2 days, stock nears 52-week high; here's why

Cobrapost allegations

On December 22, Cobrapost released an investigative report alleging large-scale related-party transactions, cash-handling irregularities, governance lapses, and regulatory non-compliance at CIFC, according to MOFSL.

 

The brokerage highlighted that the report’s key allegations include aggregation of transactions over multiple years and claims of fund diversion through group entities such as Murugappa Management Services (MMS), Chola Business Services Ltd. (CBSL), and Chola MS General Insurance (CMGICL). The report claims transactions exceeding ₹10,000 crore involving CIFC, group entities, family members, and senior management were inadequately disclosed as related-party transactions (RPTs).  ALSO READ | Anand Rathi starts coverage on Jubilant Ingrevia with 'Buy'; check target

Management refutes allegations

CIFC’s management, MOFSL said, convened an investor call to address the allegations, reiterating that the claims are baseless, selective, and stem from misinterpretation of disclosures and the applicable regulatory framework.

 

The company added that there is no change in business strategy, operating performance, or guidance, and reaffirmed confidence in delivering on stated growth, profitability, and asset-quality objectives.

 

MOFSL further noted that CIFC’s capital position and balance sheet remain strong, with net worth expected to increase by around ₹2,500 crore from FY25 levels. This includes ₹300 crore already infused through CCD conversion and a further ₹1,700 crore of CCD conversions expected over the next three quarters, which will further strengthen capital adequacy.

 

“While the call was convened to address queries related to the allegations, management also highlighted that the current quarter has been strong in terms of disbursements across both vehicle finance and home loans. The company expects 3QFY26 to mark a turnaround, with 2HFY26 likely to be seasonally strong,” said MOFSL.

 

CIFC also said that it will engage with regulators to assess any financial or market-manipulation motives and will consult legal advisors regarding potential action against Cobrapost and related reporting, while expressing confidence that regulatory scrutiny will validate its position, according to MOFSL. 

Jeffries retains 'Buy' on Cholamandalam Investment

Meanwhile, global brokerage firm Jefferies has also maintained its 'Buy' call on the scrip with a target price of Rs 1,980, as per  reports.  Jefferies called the allegations unsubstantiated while highlighting that the company has denied them, adding that cash MEI collections are common among cash-earning borrowers, while related-party transactions are routine and fully disclosed. The other issues flagged align with industry practices.  Jefferies further pointed out that the company’s management has guided for a strong third-quarter (Q3) performance. 

 

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