Q3 result highlights.
Revenue up by 25% YoY and 4% QoQ
PAT up by 28% YoY and 27% QoQ (Note: Q2 PAT was low due to deferred tax payment)
Another good show by Chola during auto slow down.
2 Likes
Very good numbers
Just curious How long chola can grow like this ?
Can it grow like this for next 5 years
Has management projected any long term growth in any of their presentations
Chola has strong and diversified customer franchise. Most of the customers are repeat customers and the brand has strong trust factor associated with it.
It has been steady compounder since many years now. They donโt give long term guidance, but in my view it can grow its PAT for 20-25% CAGR for next few years.
10 Likes
Q3 Results link
1 Like
Cholamandalam Financial Holdings, the parent company of Cholamandalam Investment & Finance, seems a lot more attractive in terms of valuations. It is also into general insurance and health insurance. Is it better to play the Cholamandalam Investment & Finance growth story through Cholamandalam Financial Holdings? Please share your thoughts
3 Likes
I have been tracking Chola for a few years now and itโs a decent company with good tieups with most of the large dealerships. Currently they seem to do well in the used vehicle markets and CV space. I think this is a good medium term candidate for next 3-5 years with decent growth. On auto slowdown I think we need to wait until May/June based on bs6 to see whether we have some traction or its a prolonged down cycle. Other than that I see company is well managed so far and management seems competent enough.
Dis 7% of my portfolio.
3 Likes
Feedback about vehicle financing from NBFC Guy :
Used vehicle financing is continuous to be good.
New vehicle financing: presently the business of new commercial vehicle financing is down by 60 to 70%. Most NBFCs, banks are not funding new vehicles which are BS4. After buying the commercial vehicle owner has to make changes like building body,tank etc as per the intended usage and get it registered accordingly before 31st March. In case the owner is unable to complete the whole process he canโt use it. In this scenario itโs very risky to do new commercial vehicle financing.
Some companies have already come out with BS6 models but customers are not ready to buy by paying more. Most of them want to wait for another 6 months to see how the new vehicle is doing. Expect only new vehicle sales to pick up only from Q3 fy21 festive season.
May be we should speak to more dealers to confirm this as generally lot of prebuying is expected before March and to know about time taken to do modification for commercial vehicles.
7 Likes
@spartan My friend who works for an NBFC told the same. Huge discounts are being provided for BSIV but getting it registered after body building is difficult. Heavy vehicle market is in passive mode for now.
2 Likes
Hmmmmโฆ
"Chola partners with Maruti Suzuki for vehicle finance.
The โBuy Now Pay Laterโ offer is aimed to provide customers with easy financing options.
A two-month deferment of EMI will bring advantage to car customers who currently are under resource crunch amidst the COVID-19 pandemic."
https://www.bseindia.com/xml-data/corpfiling/AttachLive/2b10f412-0c90-449b-a252-eedbbed25a95.pdf
5 Likes
Chola
Management Commentary
Freight rates are keeping up with diesel prices and seeing capacity utilization improve in
certain areas. Expect freight availability and utilization both to improve even further in
November i.e. post harvesting season. Disbursements to existing customers have reduced as many were under moratorium.
Company shall restructure loans of those customers whose cash flows are taking time to rebound such as bus operators and MSME; expect ~1% of AUM to get restructured. Collection efficiency was better this quarter with LAP segment doing better. Management may reverse CoVID related provisions by Mar20 depending on the situation while macro related provisions to the tune of INR 8bn shall continue to stay.
Latest Q3 segment wise breakdown, vehicle finance/LAP have shown a drop in results. Unallocable segment revenue is 73cr and Unallocable segment result is 84cr (16cr last Yr). What could be explanation behind this? Unallocable assets are 8459cr.
Hey everyone, I just noticed that on August 31st, 2021 shares have been pledged by some Key personnel and promoters, the pledge is just 0.09% (yes mind you the number is very small) of the entire promoter shareholding. Is this anything to be concerned about?
29 Oct. please check corp announcements in BSE or any app like moneycontrol. This forum can better be used for more information on business updates or insights rather than such straight forward queries.
1 Like
Is this report available in public domain?
1 Like
Cholamandalam Investment and Finance Q1 FY25 Analysis: Key takeaways!!
๐๐ญ๐ซ๐๐ญ๐๐ ๐ข๐ ๐ข๐ง๐ข๐ญ๐ข๐๐ญ๐ข๐ฏ๐๐ฌ
-
Diversification of product mix, with new businesses (CSEL, SBPL, SME) expected to contribute 15% of AUM in the future
-
Expansion into rural markets, particularly in the Home Loan segment
-
Focus on high-yield businesses and small ticket sizes in Vehicle Finance to improve yields
-
Continued branch expansion, with plans to add 150-200 new branches this year
๐๐ซ๐๐ง๐๐ฌ ๐๐ง๐ ๐๐ก๐๐ฆ๐๐ฌ
-
Shift towards used vehicles and smaller ticket sizes in Vehicle Finance
-
Growing contribution from Home Loans and Loan Against Property (LAP) segments
-
Increasing focus on unsecured lending through the CSEL business
-
Emphasis on maintaining asset quality while pursuing growth
๐๐ง๐๐ฎ๐ฌ๐ญ๐ซ๐ฒ ๐๐๐ข๐ฅ๐ฐ๐ข๐ง๐๐ฌ
-
Strong demand in vehicle retail segment, particularly used vehicles
-
Robust growth potential in affordable housing finance
-
Increasing credit penetration in Tier 2-4 cities and rural areas
๐๐ง๐๐ฎ๐ฌ๐ญ๐ซ๐ฒ ๐๐๐๐๐ฐ๐ข๐ง๐๐ฌ
-
Potential moderation in wholesale vehicle sales
-
Intensifying competition in the used vehicle finance space
-
Concerns about unsecured lending segment overheating
๐๐ง๐๐ฅ๐ฒ๐ฌ๐ญ ๐๐จ๐ง๐๐๐ซ๐ง๐ฌ ๐๐ง๐ ๐๐๐ง๐๐ ๐๐ฆ๐๐ง๐ญ ๐ซ๐๐ฌ๐ฉ๐จ๐ง๐ฌ๐
-
Credit costs: Management expects credit costs to normalize to 1-1.2% levels by year-end
-
Unsecured lending risks: Management highlighted strong credit profile of borrowers (97% with 700+ credit scores)
-
Opex ratio: Expected to moderate as new businesses scale and productivity improves
๐๐จ๐ฆ๐ฉ๐๐ญ๐ข๐ญ๐ข๐ฏ๐ ๐ฅ๐๐ง๐๐ฌ๐๐๐ฉ๐
Chola maintains a strong position in Vehicle Finance, particularly in used vehicles. The company faces increasing competition from banks and fintech players in unsecured lending and SME finance segments.
๐๐ฎ๐ข๐๐๐ง๐๐ ๐๐ง๐ ๐๐ฎ๐ญ๐ฅ๐จ๐จ๐ค
-
25-30% AUM growth over next 5 years
-
Aspiration to reach 4% ROA in 5 years
-
Credit costs expected to remain in 1-1.2% range
-
Opex ratio likely to moderate as businesses scale
๐๐๐ฉ๐ข๐ญ๐๐ฅ ๐๐ฅ๐ฅ๐จ๐๐๐ญ๐ข๐จ๐ง ๐๐ญ๐ซ๐๐ญ๐๐ ๐ฒ
The company anticipates potential capital raising in the next 2-3 years to support growth plans. Currently comfortable with Tier 1 capital above 14%, supplemented by Tier 2 capital raised through subordinated and perpetual debt.
๐๐ฉ๐ฉ๐จ๐ซ๐ญ๐ฎ๐ง๐ข๐ญ๐ข๐๐ฌ & ๐๐ข๐ฌ๐ค
Opportunities:
-
Expansion in rural markets
-
Growth in used vehicle finance
-
Scaling up of new business segments (CSEL, SBPL, SME)
Risks:
-
Asset quality deterioration in unsecured lending
-
Increased competition in core segments
-
Potential economic slowdown impacting vehicle sale
๐๐ฎ๐ฌ๐ญ๐จ๐ฆ๐๐ซ ๐๐๐ง๐ญ๐ข๐ฆ๐๐ง๐ญ
Management indicated positive customer sentiment, particularly in vehicle retail and affordable housing segments. However, some caution noted due to upcoming elections and potential economic uncertainties.
4 Likes
Cholamandalam Investment and Finance company
Q2 FY 25 results and concall highlights -
Q2 Disbursements @ 24.3k cr, up 13 pc YoY
Loan book @ 1.64 lk cr, up 33 pc YoY
NII - 3055 vs 2205 cr, up 39 pc
PAT - 963 vs 762 cr, up 26 pc
NIMs @ 7.5 vs 7.4 pc
Expense ratio @ 3.0 vs 3.0 pc
Losses and Provisions @ 1.4 vs 1.3 pc
RoA @ 2.2 vs 2.4 pc
**Gross NPAs @ 3.78 vs 4.07 pc **
**Net NPAs @ 2.48 vs 2.59 pc **
RoE @ 18.24 pc ( healthy levels )
Segmental performance -
Vehicle Finance -
Company has a well diversified VF portfolio financing CVs, 2Ws, PVs, Tractors and Construction equipment from their wide network of 1461 branches
Disbursements @ 12.3k cr, up 5 pc YoY ( account for almost 50 pc of companyโs disbursements )
PBT @ 631 cr, up 26 pc
LAP -
Lending to SME customers against the security of their immovable properties from 779 branches. 78 pc of the lending book in this segment is against self occupied residential properties
Disbursements @ 4.3k cr, up 35 pc YoY
PBT @ 295 cr, up 26 pc
Home Loans -
Providing Home Loans in the affordable segments from 697 branches
Disbursements @ 1.8k cr, up 16 pc
PBT @ 171, up 79 pc
SME Loans -
Providing SME loans for financing of Supply chain materials, term loans for Capex, LAS, funding against equipment and machinery from 88 branches
Disbursements @ 1.9k cr, up 1 pc
PBT - 27 cr, up 30 pc
CSEL ( consumer and small enterprises loans ) -
Providing personal loans, professional loans, business loans to salaried, self employed and small businesses through 482 branches. In this segment, company does tie up with fintechโs, partners like Samsung Finance ( for Samsung products ) etc
Disbursements @ 3.6k cr
PBT - 100 cr, up 118 pc
SBPL ( secured business and personal loans ) -
Provide Secure business and personal loans against self occupied residential properties through 414 branches
Disbursements @ 312 cr, up 27 pc
PBT - 35 vs 2 cr
Company is currently serving aprox 43 lakh customers from a total of 1508 branches ( most business segments mentioned above operate from same branches except for a few )
Branch Network -
South India - 29 pc
North India - 23 pc
West India - 23 pc
East India - 25 pc
Cost of funds in Q2 was @ 7.1 pc
Collection efficiency in Q2 was hit by prolonged monsoons which led to a delay in harvests which eventually reduces the money in the hands of the consumers. This should reverse in Q3
Slippages for Q2 @ 930 cr ( thatโs an annualised slippage ratio of aprox 2.3 pc )
Second half is always better vs H1 on collections and recoveries because of the harvest of Kharif crops and release of a lot of payments from GoI
Company has added aprox 7k new employees in Q2. Employees have been added across all segments and the company believes they have a good opportunity to ramp up all their business verticals ( almost half of these employees have been added on the collections side of the business )
CV business should pick up as the Govt capex picks up. Seeing descent demand revival in PVs an 2Ws in Oct. Overall, disbursements in Q3 are always much better than Q2. Same trend is expected to continue for this FY as well
Aprox 25-30 pc of companyโs work force is employed in the collections division
Company aims to grow the CSEL business but still keep it below 10 pc of overall business as its the only unsecured business that they are operating
Asset quality trends for the company in used vs new CVs are very similar
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
2 Likes