Cholamandalam Q3 Results Review - Resilient Show: Yes Securities

Yes Securities Report

Cholamandalam Investment and Finance Company Ltd.'s core net interest income (excluding of fees) and pre-provision operating profit came in-line with our expectation while profit after tax was 3% lower on slightly higher credit cost. Assets under management growth remained strong at 7.7% QoQ/40% YoY even as disbursement growth decelerated to 4% QoQ/27.5% YoY.

Home loan originations were flat QoQ whereas disbursements in new businesses (consumer and small enterprise loans, secured business and personal loans and small and medium enterprise loans) have been nearly stagnant over the past three quarters.

Reported net income margin was flat QoQ at 7.4% at company level, and it improved by 20 basis points in vehicle finance and 100 bps in HL business segments on the back of Income Yield improvement of 50 bps and 110 bps respectively. Overall cost of funds increased by only 10 bps QoQ.

There was a significant jump in fee income with addition of insurance distribution commission after receipt of license in October.

Opex/asset ratio increased 10 bps sequentially across vehicle finance, loan against property and home loan businesses, reflecting strong business/disbursements activity and significant distribution/manpower addition in recent quarters.

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