Cholamandalam Investment & Finance Company consolidated net profit rises 36.85% in the June 2020 quarter
Cholamandalam Investment & Finance Company standalone net profit rises 37.14% in the June 2020 quarter
Cholamandalam Investment and Finance Company's consolidated net profit surged 36.8% to Rs 431.30 crore on 3.9% rise in total income to Rs 2,125.61 crore in Q1 June 2020 over Q1 June 2019.
Consolidated profit before tax (PBT) soared 20.1% to Rs 581.98 crore in Q1 June 2020 as against Rs 484.65 crore in Q1 June 2019. Current tax expense for the quarter fell 5.5% at Rs 177.08 crore as against Rs 187.32 crore in Q1 June 2019. The result was declared at the fag end of market hours yesterday, 30 July 2020.
Net Income Margin (NIM) rose 4% to Rs 983 crore in Q1 FY2021 as against Rs 943 crore in Q1 FY2020. The capital adequacy ratio (CAR) of the company as on 30 June 2020 was at 20.42% (as per Ind AS) as against the regulatory requirement of 15%.
Aggregate disbursements for the quarter ended June 2020 declined 58% to Rs 3,589 crore. Vehicle Finance (VF) business fell 53% YoY to Rs 3,231 crore during the quarter. Loan Against Property business disbursed Rs 119 crore during the quarter as against Rs 1,101 crore in Q1 June 2019, registering a fall of 89% Y-o-Y. Home loan business disbursed Rs 190 crore as against Rs 420 crore a year ago. Assets under management grew by 13% to Rs 70,826 crore as compared to Rs 62,827 crore for the same quarter in FY20.
Cholamandalam Investment and Finance Company (CIFCL)'s asset quality as on 30 June 2020 represented by Stage III assets stood at 3.3% with a provision coverage of 41.6% from 3% in Q1 of FY20 with a provision coverage of 36.2%. The Stage III assets have improved from 3.8% in Mar 2020 to 3.3% in June 2020. The total additional provision carried for Covid and Macro is now Rs 551 crore as against Rs 534 crore as of March 2020.
Nearly 74% of company's customers had availed moratorium considering the uncertainty over the period of lockdown. However, post relaxations in lock down after May 15, it witnessed traction with respect to collections from customers who had availed moratorium and they have started paying their EMIs in advance. The firm has around 50% of its moratorium customers repaying partial or full installments.
The company has not availed moratorium so far on its borrowings. It has a strong liquidity position with Rs 7,169 crore as cash balance as of June end, with a total liquidity position of Rs 11,677 crore (including undrawn sanctioned lines), it said.
Commenting on the Q1 result, Arun Alagappan, the managing director (MD) of CIFCL, has stated that: "It was a challenging quarter for the NBFC industry with muted disbursements and a slowdown in repayments due to the moratorium and lockdown. Chola's response was comprehensive, with our treasury ramping up liquidity, our tech team identifying and deploying digital interventions for disbursements and collections, our analytics team being able to identify vulnerable segments and more importantly, our business teams adapting to the new normal of driving business despite working away from offices. Valuable learnings from these past few months shall remain with us for many more years to come."
"While it was important to respond to the COVID-19 shock, it was also equally important for us to not lose focus of the company's long-term aspirations. Optimizing the company's cost structure was strategically important for us. The quarter gone by helped us critically evaluate our expenses, with an improvement already visible - our opex ratio has come down to 2.2% from 2.6% just a quarter before. During the quarter, we have initiated a comprehensive process transformation program for the vehicle finance business. The LAP business has rolled out its newly developed Loan Origination and Loan Management System during the quarter gone by."
"Looking ahead, we expect disbursements to improve, considering our diversified product portfolio and pan India presence. We will also continue to retain our increased focus on the collections and cost fronts," he added.
Meanwhile, the company's board approved issuing secured/unsecured redeemable non-convertible debentures of a face value of Rs 10 lakhs each at par aggregating to Rs 28,000 crore in one or more tranches on private placement basis.
Share of Cholamandalam Investment and Finance Company declined 3.53% to Rs 206.55. The company is a diversified non-banking finance company engaged in providing vehicle finance, home loans and corporate mortgage loans, small and medium enterprises (SME) loans, investment advisory services, stock broking and a range of other financial services.
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