Chola fin Q2FY25: Robust NII growth backed by healthy growth in book
Company Name: Cholamandalam Investment & Finance Company Ltd | NSE Code: CHOLAFIN | BSE Code: 511243 | 52 Week high/low: 1,652 / 1,011 | CMP: INR 1,302 | Mcap: INR 1,09,455 Cr | P/B- 5.06
About the stock
➡️Cholamandalam Investment & Finance Company is one of the premier diversified non-banking finance companies in India, engaged in providing vehicle finance, home loans and Loan against property.
Robust double digit growth in book (33% YoY) driven by vehicle loan, LAP and home loan
➡️Chola fin’s book report a strong double digit growth of 335 YoY (+6% QoQ) to 1,64,642 Cr led by robust growth in vehicle loan, LAP and home loan. Vehicle loan constitute 56% of overall loan book, growing 22% YoY (+4% QoQ ) to 92,012 Cr. While LAP and home loan contribute 20%/10%, growing by 41% YoY (+8% QoQ)/47% YoY (+9% QoQ) to 34,824 Cr/15,892 Cr. While other segment report strong growth but have low weight in overall loan book followed by Consumer and small enterprise loan (up 67% YoY), SME (up 47%) YoY), secured business and personal loan (up 123% YoY).
➡️Disbursement grew muted double didgit growth of 13% YoY and remain flat QoQ to 24,314 Cr due to slowdown in vehicle disbursal. Vehicle disbursement have alomost 50% weight of overall disbursement, report muted 5% YoY growth and degrowth on QoQ basis by 3% to 12,336 Cr. While LAP grew 35% YoY (+11% QoQ) to 4,295 Cr and consumer and small enterprise grew 26% YoY (+3% QoQ) to 3,588 Cr. While this robust growth in LAP and CSEL offset by muted growth in vehicle finance.
➡️Borrowing growth in line with loan book growth by 32% YoY (+5% QoQ) to 1,57,794 Cr while majorly funded by bank loan, debentures and Securitisation.
| Book Growth (As on) | Q2FY25 | Q2FY24 | YoY (%) | Q1FY25 | QoQ (%) |
| AUM | 1,64,642 | 1,24,246 | 33% | 1,55,442 | 6% |
| Disbursement | 24,314 | 21,542 | 13% | 24,332 | 0% |
| Borrowings | 1,57,794 | 1,19,470 | 32% | 1,49,902 | 5% |
NII and PAT grew on loan book expansion & NIMs expansion; Leverage muted and provision up
➡️Interest income grew 37% YoY (+7% QoQ) to 5,768 Cr driven by robust loan book growth and expansion in yield by 30 bps YoY. NII increased 35% YoY (+5% QoQ) to 2,713 Cr attributed to NIMs expansion by 10 bps YoY. PPOP grew robust at 35% YoY (+4% QoQ) to 1,922 Cr thanks to higher other income and while operating leverage have no impact. PAT grew 26% YoY (+2% QoQ) to 963 Cr due to higher provision expense (up 56% YoY).
| Years (in Cr) | Q2FY25 | Q2FY24 | YoY (%) | Q1FY25 | QoQ (%) | Commentry |
| Interest income | 5,767.96 | 4,220.52 | 37% | 5,375.27 | 7% | |
| Interest expenses | 3,055.13 | 2,205.20 | 39% | 2,795.65 | 9% | |
| NII | 2,712.83 | 2,015.32 | 35% | 2,579.62 | 5% | YoY growth led by AUM growth & NIMs expansion |
| Other income | 524.79 | 351.37 | 49% | 453.7 | 16% | |
| Total Net income | 3,237.62 | 2,366.69 | 37% | 3,033.32 | 7% | |
| Employee expenses | 794.65 | 570.24 | 39% | 683.45 | 16% | |
| Other OpEx | 520.87 | 375.89 | 39% | 499.95 | 4% | |
| Total Opex | 1315.52 | 946.13 | 39% | 1183.4 | 11% | |
| PPOP | 1,922.10 | 1,420.56 | 35% | 1,849.92 | 4% | Solid growth on book growth; OpEx leverage flat |
| Provision | 623.52 | 399.81 | 56% | 581.43 | 7% | |
| PBT | 1,298.58 | 1,020.75 | 27% | 1,268.49 | 2% | |
| Tax expenses | 335.53 | 258.26 | 30% | 326.26 | 3% | |
| Tax rate | 26% | 25% | 2% | 26% | 0% | |
| PAT | 963.05 | 762.49 | 26% | 942.23 | 2% | PAT growth on book expansion; leverage muted, provisions up |
| PAT% | 15% | 17% | -8% | 16% | -5% | |
| EPS | 11.45 | 9.27 | 24% | 11.21 | 2% | |
| No. of equity shares | 84.075 | 82.285 | 2% | 84.06 | 0% |
Asset quality disappoint on QoQ basis (GNPA/NNPA up 21 bps/ 14 bps QoQ)
➡️Chola fin’s asset quality has maintain on YoY basis but decline sequentially. GNPA down 13 bps YoY but jump 21 bps QoQ to 2.83% while NNPA disappoint YoY as well as sequentially by 1 bps/14 bps to 1.59%. Its normal effect due to the lower base on last quarter. Provision coverage ratio decline 280 bps YoY (-100 bps QoQ) to 44.5%.
| Asset Quality (%) | Q2FY25 | Q2FY24 | YoY (bps) | Q1FY25 | QoQ (bps) |
| GNPA | 2.83 | 2.96 | -13 | 2.62 | 21 |
| NNPA | 1.59 | 1.58 | 1 | 1.45 | 14 |
Valuation and key metrics
➡️Currently the stock is trading at multiple of 5.06 Price to book value. Yield on loan jump 30 bps YoY (down 10 bps QoQ) to 14.6% while CoF rise 20 bps YoY (up 10 bps QoQ) to 7.1%. This result in expansion in NIMs by 10 bps YoY to 7.5% but decline on QoQ basis by 10 bps.
| Key metrics (%) | Q2FY25 | Q2FY24 | YoY (bps) | Q1FY25 | QoQ (bps) |
| Yield | 14.6 | 14.3 | 30 | 14.7 | -10 |
| CoF | 7.1 | 6.9 | 20 | 7 | 10 |
| NIMs | 7.5 | 7.4 | 10 | 7.6 | -10 |
| Credit Cost | 1.4 | 1.3 | 10 | 1.5 | -10 |
| ROA | 2.2 | 2.4 | -20 | 2.4 | -20 |
| ROE | 0 | 0 | |||
| PCR | 44.5 | 47.3 | -280 | 45.5 | -100 |
| CAR | 19.5 | 1950 | 18.03 | 147 |
The image added is for representation purposes only
