Cholamandalam Q4 net up 33% at Rs 2.9 bn on robust vehicle finance biz

Profit for FY18 up 35.5% to Rs 9.7 billion, loan disbursements up 35.1%

Cholamandalam Investment and Finance Company Ltd (CHOLA) has posted a net profit of Rs 2.91 billion for the fourth quarter ended March 31, 2018, an increase of 32.6 per cent from Rs 2.19 billion in  net profits reported during the third quarter of FY2018. 

The company’s net profit has grown by 35.5 per cent on an annual basis to Rs 9.74 billion for the financial year ending March 31, 2018, from Rs 7.18 billion in the previous fiscal year.

Loan disbursements are up by 35.1 per cent, to Rs 251.14 billion for FY2018 as against Rs 185.9 billion worth of loans disbursed during the last fiscal year. While total Income grew by 16.4 per cent, to Rs 54.26 billion in FY2018 as against Rs 46.6 billion worth of income received by CHOLA during FY2017.

The company has pushed its Vehicle Finance business over the past few quarters, to register an annual disbursement growth rate of 42 per cent, from Rs 144.7 billion in vehicle loans disbursed in FY2017 to Rs 205.4 billion disbursed in FY2018.

On a quarter-on-quarter basis, the vehicle finance business has grown by 55 per cent, from Rs 4.4 billion disbursed during the third-quarter of FY2018, to rs 68.2 billon disbursed in the fourth quarter of FY2018, alone.

This is the highest disbursement of loans recorded by CHOLA, during a particular quarter.

Home Equity loan disbursements are up by 4 per cent, on a year-on-year basis, to Rs 31.74 billion during FY2018. On a Q-on-Q basis, CHOLA has grown its home equity loan book by 48.1 per cent, to Rs 8 billion in the fourth quarter of FY2018, from Rs 5.4 billion in the previous quarter of this fiscal.

Total Assets under Management has grown by 25 per cent over the past one year, to Rs 428.8 billion at the end of FY2018 from Rs 341.7 billion at the end of FY2017. A report by Centrum Broking published last month says that they expect the loan book for CHOLA to grow by 24 per cent (CAGR) to Rs 519.65 billion between FY2018 and FY2020.

While the Long term borrowings for the company have increased by 36 per cent and now stand at Rs 205.45 billion for FY2018 as against Rs 151 billion at the end of FY2017.

Interestingly, the company has been left with less cash on its books at the end of FY2018, than in FY2017. Cash reserves are down by 9.2 per cent, on an annual basis, from Rs 4.94 billion in FY2017 to Rs 4.5 billion at the end of FY2018.

CHOLA’s Board of Directors’ have recommended distribution a final dividend at 20 per cent, or Rs 2 per equity share, aggregating to Rs 312.6 million, for the year ended 31 March 2018.

Additionally, the board has also recommended increasing their overall borrowing limits from Rs 400 billion to Rs 600 billion, which would include the issuance of Rs 180 billion worth of   Secured/Unsecured Non-Convertible Debentures.

Earnings per share for the year ended March 31, 2018, stands at Rs 62.32 (Basic) and Rs.62.26 (Diluted), compared to Rs 46.01 (Basic) and Rs 45.99 (Diluted) for financial year ending March 31 2017.

Gross Non-Performing Assets (GNPA), for all types of loans, has improved from 4.66 per cent in FY2017 to 2.94 per cent in FY2018, while Net Non-Performing Assets have similarly decreased from 3.19 per cent in FY2017 to 1.66 per cent in FY2018.

The GNPAs of both the Vehicle Finance and Home Equity businesses have decreased between FY2017 and FY2018, with a greater reduction taking place in the NPA ratios of vehicle loans than of home loans.

Return on Total Assets against Profit Before Tax (ROTA-PBT) has improved in FY2018 to 4.6 per cent as against 3.9 per cent in FY2018, on the back of a better product mix and reduction in net credit losses and lower cost of funds, says a press release contained in stock exchange filings made by CHOLA on Monday.

CHOLA’s stock price closed at Rs 1,705.85 on the National Stock Exchange, on Monday, up 9.18 per cent from its previous closing price.