29% pat growth is for the full year. For Q4, pat growth is only 2%. (Impacted by high finance cost)
Actually this has become a very common practice in Indian market. Highlight what looks good. ( report % growth). If it doesn’t look impressive, then report the absolute number instead of % growth.
Here is the line from chola press release. ( As you can see they just mentioned 292 cr for Q4)
PAT was up at ₹ 1,186 Cr for the year (Up by 29% YoY) & ₹ 292 Cr for Q4.
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I think key highlight is all time low NPA which is in line with banks like Kotak now.
Flat profit is not a worry as NBFCs went through very turbulent times in last few months which would have pushed up cost of funds for Chola.
Chola seems to be class apart even if one compares with tier 1 nbfcs like M&M, Shriram, L&T fin etc
How does Chola compare with Bajaj finance ?
Chola has CV as main loan book while BF has retail consumption
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Chola is also into home equity business and has small brokerage and investment biz.
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Even in this tough environment, quarterly results are good with a 12% rise in Net Profit
http://www.cholamandalam.com/files/Financials/Financials_June2019.pdf
Notes from Chola finance AGM/ discussion on sidelines. (There may be few mistakes from me while preparing notes. Nothing much to gain from AGM. Unfortunately management has to spend lot of time on non-core issues by few shareholders.Their AR and con-calls are more informative)
Last year H1 was good with govt recapitalization of banks,infra push,resolutions of stressed assets and significant growth. From September things have changed with liquidity crisis and NBFC problem.
Chola responded quickly and became more prudent in lending from September and maintained liquidity adequately expecting deterioration in situation. Competitors are affected due to liquidity, poaching of loans by competitors has reduced significantly. We continue to grow cautiously
Using analytics for faster approvals, customer on boarding ,efficiency ,underwriting and for early warning signs.(wants to emulate leading NBFC using data). digital initiative taken and its impact will take time to play out but definitely it’s priority. (Chola AR is mention lot about using data,analytics. They have also inducted new director Mr Rohan Verma who is creator of MapmyIndia to guide on digital initiatives ).
Company developed own proprietary software platform FALCON to approve faster approval of loans.
While focusing on digital we want to maintain the traditional way of doing business also. 20,ooo employees on ground working with small entrepreneurs, vehicles owners and home buyers which is important.
Chola is aware of rapid growing fintech companies and we are in touch with some of them to work in some areas.
Vehicle business going through rough phase. our partners/dealers inventory has increased. Heavy commercial vehicles affected more. We have cut down HCV finance. Focus on light and small commercial vehicle which are less impacted. Strong demand from used vehicle finance which has shown good growth This trend has seen even in past when new vehicle sales goes down.
We are lending to high yield segment(High risk also?) result of which will be visible next few quarters. Vehicle finance spread across many segments so we are able to grow even in this tough time.
Can’t say when the situation will get better. Generally pre-buying before BS VI should happen but not sure at this point.
Mixture of bank and market borrowings…presently NIM is down…holding excess liquidity which is affecting NIM to some extent.
Home equity we have made come back last year. No exposure to any large groups of RE. Remain retail focused and lend to individuals with property back up or personal loan with assets back up.
Home loans …yet to get HFC certificate approval…focus across all geographies,categories(salaried,nonsalaried) cities and small towns,…14-15 lac is avg ticket size.
Loan take over by others also stopped significantly.
Presently no plan of taking deposit or gold loan.
Mr. Subbaiah is part of group and continue to guide. we focus on building future leadership as group.
No of branches increased to 999…79% of are in tier 3 to 6 cities. No of braches will increase further to 1200 by end of FY20.
Discl: invested 3% of portfolio.
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Chola’s vehicle finance business delivered 23% disbursements growth in 1QFY20 (loan book was up 28% yoy and 6% qoq). The company had guided for about 15% loan growth in 4QFY19; it has now guided that momentum will likely be sustained over the next nine months as well. Most large NBFCs that declared results have guided for moderation in business momentum or have refrained from giving any guidance on growth.
Chola’s NIM, in the vehicles finance business, was down 30 bps yoy and 70 bps qoq. Yet, the company remains assertive on growth and hence stands out over peers.
According to Chola’s management, reduction of competition, coupled with its expanded footprint has provided growth headroom. Relative to peers, Chola has better access to funding. It is focusing on used CVs, LCVs, MUVs and two-wheelers i.e. segments with favorable risk-adjusted returns. Early warning indicators currently don’t seem to suggest any challenges. Its asset yields will likely rise as these (higher-yielding) loans increase. Repricing of bank loans post MCR cuts will help NIM as well.
Other pointers like OEMs’ volumes and auto analysts’ forecasts provide bleak near-term outlook. A prolonged period of slowdown poses risk to asset quality as well.
Chola has reported superior performance over peers on growth and asset quality across the CV cycle during the last 5-6 years. The company has been agile to react to market trends to scale up or down growth and recoveries. This gives some comfort on its ability to sense early warning indicators and inflection points. As seen in the past, management will dynamically reassess its growth outlook, in our view.
source: Kotak
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HDFC Sec. Results Review
https://www.hdfcsec.com/hsl.docs//Cholamandalam%20Finance%20%20-%201QFY20%20-%20HDFC%20sec-201907311927088782251.pdf
Growing polarization in the NBFC space (stemming from better parentage and access to funds) has enabled CIFC to sustainably outperform peers across operating metrics. Diversification across products and geographies along with superior underwriting practices and focus on collections pave the way for sustained outperformance. However, with deteriorating macros, asset quality (across asset financiers) will be watched.
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HDFC has cholamandalam in their midcap mutual fund in big quantity
Annual report 2018-2019
http://www.cholamandalam.com/files/MEDIA/Final-Annual-report-2019.pdf
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Chola quarterly results are out and it is a flat quarter.
Revenue is up by ~27% in this tough environment.
Profit before tax is up by ~13%, margins has got hit.
However due to higher tax payment (deferred tax), net profit remains flat.
Can someone explain the deferred tax paid here?
http://www.cholamandalam.com/files/Financials/Financials-september-30-2019.pdf
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Family rift may lead to some boardroom battles…
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Family rift may affect all group companies : Carborundum Universal Ltd., Cholamandalam Financial Holdings Ltd., Cholamandalam Investment and Finance Company Ltd., Cholamandalam MS General Insurance Company Ltd., Coromandel International Ltd., Coromandel Engineering Company Ltd., E.I.D. Parry (India) Ltd., Parry Agro Industries Ltd., Shanthi Gears Ltd., Tube Investments of India Ltd., and Wendt (India) Ltd.
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