Murugappa Group's finance firm Chola expects AUM growth of 20-25% in FY25

Company expects healthy growth in its key business of vehicle loans and new initiatives in lending to consumer and small enterprises

Cholamandalam Investment and Finance Company (Chola), the financial services arm of Murugappa group, said on Monday it is working to expand its asset under management (AUM) by 20-25 per cent in Financial Year 2024-25 (FY25). It expects a growth of around 30 per cent in FY24, a senior company executive told ‘Business Standard’.

The company's AUM grew by 36 per cent from Rs 103,789 crore in the third quarter of FY23 to Rs 141,143 crore in the same period in FY24. The Chennai-based company touched the Rs 1 trillion mark in AUM in FY23.

“During Financial Year 2024-25, we are expecting a growth of around 20-25 per cent. In the third quarter, we saw a growth of 36 per cent. Last year, Q3 and Q4 we had higher growth. Hence, you will see AUM moderating to around 30 per cent for 2023-24,” said Arul Selvan, president and chief financial officer of Chola.

The company’s net profit grew 28 per cent to Rs 876 crore in the third quarter of FY24, compared to Rs 684 crore in the same period in FY23. “We have seen a growth in volume and AUM and have reduced our NPAs (non-performing assets). All these contributed to growth during the quarter. The negative is the slight increase in cost of funds. That is going to stabilise in the next two quarters,” said Selvan. The company’s gross NPA reduced to 3.92 per cent in December compared to 4.07 per cent in September 2023. Net NPA dropped to 2.56 per cent as of December against 2.59 per cent in September.

Chola expects healthy growth in its key business of vehicle loans in FY25. “I believe elections will have a positive impact on vehicle finance, as more vehicles will be put on use. Demand for vehicles will be good next financial year. Irrespective of fluctuations, we expect it to grow healthy in the coming year also at around 10-12 per cent,” he said. Vehicle finance loans contribute to around 60 per cent of the company’s AUM.

The non-banking financial company is betting on its new businesses of consumer and small enterprise, secured business, personal and SME loans. “At present, these businesses contribute to around 11 per cent of the overall business, which is expected to touch 15 per cent in the next two years.”