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    Cholaman.Inv.&Fn

    CHOLAFIN
    Financial Services·28 Apr 2025
    Management Summary

    Cholamandalam Investment and Finance Company Limited reported a strong Q4 FY25, with full-year AUM growing 30% to INR 1,99,876 crores and PAT increasing 24% to INR 4,259 crores. Asset quality improved with GNPA at 3.97% and NNPA at 2.63%. The company is targeting 20-25% AUM growth, driven by 30% growth in non-vehicle segments and 20% in vehicle finance, while strategically reducing exposure to lower ROTA and higher delinquency segments like supply chain finance and Fintech-led CSEL. A new Gold Loan business is being launched with a target of INR 2,000 crores AUM.

    Highlights

    5

    • Total AUM grew 30% YoY to INR 1,99,876 crores from INR 1,53,718 crores.

    • Disbursements for the year grew 14% YoY to INR 1,00,869 crores.

    • PAT for the year grew 24% YoY to INR 4,259 crores.

    • PBT ROA for the year was 3.3% and ROE for the quarter was 22.2%.

    • Asset quality improved with GNPA at 3.97% and NNPA at 2.63%.

    Concerns

    3

    • SME disbursements dropped 4.2% YoY for the year due to a conscious decision to slow down on lower ROTA products like supply chain finance.

    • CSEL disbursements dropped 29.5% YoY in Q4 due to progressive exit from some partnership-led volumes and issues with FLDG rule changes impacting Fintech business.

    • Credit costs in newer businesses (CSEL, SME) are higher, though expected to improve by year-end.

    What Changed2

    vs Q2 FY26

    Guidance items5 → 14 (+9)Q&A highlights5 → 8 (+3)
    Key financials

    Metrics

    11

    Periods

    2

    Headline

    9
    • Total AUM
      ₹2.00L Cr
      YoY+30%
    • Disbursements (FY)
      ₹1.01L Cr
      YoY+14.0%
    • Net Income (FY)
      ₹13,570 Cr
      YoY+36%
    • PAT (FY)
      ₹4,259 Cr
      YoY+24%
    • PBT ROA (FY)
      3.3%

    Q4

    2
    • Disbursements
      ₹26,417 Cr
      YoY+7.0%
    • ROE
      22.2%

    Segment breakdown

    • Vehicle Finance₹14,430 Cr54.6%
    • LAP (Loan Against Property)₹5,539 Cr21.0%
    • Home Loan₹1,983 Cr7.5%
    • SME₹1,733 Cr6.6%
    • Consumer and Small Enterprise Loans (CSEL)₹2,328 Cr8.8%
    • Secured Business and Personal Loans (SBPL)₹404 Cr1.5%
    Donut· Share of Disbursements (Q4)

    Capital allocation

    2
    high confidence
    CategoryHeadline
    Dividend

    ₹0.7/share (final)

    Liquidity

    Cash ₹15,267 crores

    Includes INR 5,866 crores held at HQLA for LCR purposes. Total liquidity position including undrawn consortium lines was INR 15,712 crores.

    Guidance & targets

    14
    CategoryTargetPriority
    Volume
    Overall AUM Growth
    20-25%
    		High
    Volume
    Non-Vehicle Growth
    30%
    		High
    Volume
    Vehicle Finance Growth
    20%
    		High
    Volume
    Home Loan Disbursement Growth
    15-20%
    		High
    Volume
    Home Loan Asset Growth
    30%+
    		High
    Volume
    LAP Disbursement Growth
    25-30%
    		High
    Credit Quality
    Overall Credit Cost
    1.3%
    		High
    Credit Quality
    Vehicle Finance Credit Cost Reduction
    20 bps
    		High
    Credit Quality
    SME/CSEL Credit Cost Reduction
    50 bps
    		High
    Credit Quality
    Home Loan Delinquency Rate
    0.4-0.5%
    		High
    Profitability
    NIM Improvement
    10 bps
    		High
    Profitability
    PBT ROA
    3.4% then 3.5%
    		Medium
    Efficiency
    Opex to Asset Ratio
    3-3.1%
    		High
    New Business
    Gold Loan AUM
    INR 2,000 crores
    		Medium

    Overall AUM Growth

    Next quarter/FY26
    Current30% YoY (FY25)
    Target20-25% (FY26)

    Why it matters

    Key indicator of business expansion and market share gain.

    at the AUM level, we still believe we have always guided in the 20% to 25% range, and we still believe that will hold.

    How to verify

    key_financials.metrics[label='Total AUM']

    Risks & concerns

    4
    RiskSeverity

    Higher Credit Costs in Newer Businesses (SME, CSEL)

    Credit costs in SME and CSEL are currently higher due to strategic shifts and issues with Fintech partnerships, but expected to reduce by year-end. — Management acknowledged

    medium

    Dependence on Monsoon for Vehicle Finance Performance

    Vehicle finance NCL improvement is partly dependent on a good monsoon, which was favorable last year. — Management acknowledged

    medium

    Home Loan Delinquency Rate

    Analyst noted a Q4 delinquency rate of 0.6% for Home Loans, but management clarified the full-year rate is 0.40% and expects to maintain 0.4-0.5% for FY26. — Analyst downplayed

    low

    Impact of Tamil Nadu Bill on Lending

    Analyst raised concerns about a new Tamil Nadu bill, but management clarified it does not apply to NBFCs and thus will not impact their operations. — Analyst downplayed

    low

    Q&A highlights

    8

    “at the AUM level, we still believe we have always guided in the 20% to 25% range, and we still believe that will hold. In Home Loans in specific, I will let Prashant take that question. So, for home loans, we are seeing around 15% to 20% growth. That is on disbursement side and book will be growing at the rate of 30% plus for next 2 years.”

    Analyst sought clarification on overall and specific segment growth targets, which management confirmed with specific numbers for AUM and Home Loans.

    asked by Dhaval from DSP Mutual Funds

    2 min read6 chapters

    Detailed Narrative

    01

    Strong Financial Performance and AUM Growth

    Cholamandalam Investment and Finance Company Limited reported robust financial results for Q4 FY25 and the full fiscal year. Total AUM grew by 30% year-on-year to INR 1,99,876 crores from INR 1,53,718 crores. Disbursements for the year reached INR 1,00,869 crores, marking a 14% increase, while Q4 disbursements were INR 26,417 crores, up 7%. Net income for the year surged 36% to INR 13,570 crores, and PAT increased 24% to INR 4,259 crores.

    02

    Improving Asset Quality and Capital Adequacy

    The company demonstrated an improvement in asset quality, with Gross Stage 3 assets (90+ dues) decreasing to 2.81% as of March '25 from 2.91% in December '24. GNPA, as per RBI norms, also reduced to 3.97% from 4% in December '24, and NNPA stood at 2.63%. The Capital Adequacy Ratio remained strong at 19.75%, well above the regulatory requirement of 15%, with Tier 1 capital at 14.41% and Tier II capital at 5.34%.

    03

    Segmental Performance and Strategic Shifts

    Vehicle Finance disbursements grew 12% for the year to INR 53,922 crores, with Q4 growth at 11%. LAP and Home Loan segments showed strong growth, with LAP disbursements up 32% for the year to INR 17,913 crores and Home Loan up 16% to INR 7,404 crores. Conversely, SME and CSEL disbursements saw declines due to strategic decisions to exit lower ROTA products like supply chain finance and progressively move away from certain partnership-led Fintech volumes, which had higher credit costs.

    04

    Guidance for FY26 and Profitability Outlook

    Management provided guidance for 20-25% overall AUM growth for FY26, driven by 30% growth in non-vehicle segments and 20% in vehicle finance. They anticipate a reduction in overall credit cost from 1.4% to 1.3% and a NIM improvement of 10 basis points for the full year. The Opex to Asset ratio is targeted to be maintained at 3-3.1%, reflecting a focus on efficiency amidst growth.

    05

    New Gold Loan Business Initiative

    The company is launching a new Gold Loan business, starting with 120 standalone branches in South and East India. This initiative will be cautious and technology-driven, with a target to achieve INR 2,000 crores in Gold Loan AUM within the fiscal year or 1.5 years. This move aims to diversify the product portfolio and tap into a new growth avenue, leveraging existing market opportunities.

    06

    Shareholder Returns and Liquidity Position

    The Board recommended a final dividend of INR 0.70 per share, which, combined with the interim dividend of INR 1.30 per share declared earlier, brings the total dividend for FY25 to INR 2.00 per share. The company maintains a strong liquidity position with INR 15,267 crores in cash balance, including INR 5,866 crores held at HQLA for LCR purposes, and a total liquidity position of INR 15,712 crores including undrawn consortium lines.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.