Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Cholamandalam Investment and Finance Company Ltd (NSE: CHOLAFIN) Q4 2026 Earnings Call dated May. 04, 2026
Corporate Participants:
Vellayan Subbiah — Executive Chairman
Ravindra Kundu — Managing Director and Chief Executive Officer
D. Arul Selvan — President and CFO
Ranjit Ramachandran — President & Chief Business Officer, Gold Loans
Analysts:
Nischint Chawathe — Analyst
Kunal Shah — Analyst
Raghav Garg — Analyst
Unidentified Participant
Viral Shah — Analyst
Unidentified Participant
Abhijit Tibrewal — Analyst
Unidentified Participant
Abhishek Murarka — Analyst
Piran Engineer — Analyst
Unidentified Participant
Unidentified Participant
Shubhranshu Mishra — Analyst
Nidhesh Jain — Analyst
Unidentified Participant
Unidentified Participant
Unidentified Participant
Bunty Chawla — Analyst
Presentation:
Nischint Chawathe — Analyst
Welcome to the interaction with management of Chola Mandalam Investment and Finance Co. Ltd. Today we discuss four QFY26 earnings and management Outlook. The senior management is represented by Mr. Velayan Subaya, Executive Chairman, Mr. Ravindra Kundu, Managing Director and CEO and Mr. Arul Selvan, Chief Financial Officer. I would now like to hand over the call to Ven for his opening comments after which we’ll take the Q&As.
Vellayan Subbiah — Executive Chairman
Thank you Nishant for hosting the call and good morning everyone. I’m happy to take you through performance for Chola for Q4FY26. So first we’ll go through the dispersing growth for the quarter so Chola reported aggregate disbursements of 32,913 crores which represents a 25% year on year growth for Q4 which resulted in AUM increasing to 2,42,630 crores. AUM growth remained healthy at 21% as at the end of the quarter reflecting sustained momentum across the portfolio. Disbursements registered strong broad based growth across all major product segments during the quarter.
The vehicle Finance business reported 26% year on year growth in Q4 driven by sustained demand across vehicle categories with auto AUM increasing 18% year on year to one 19,558 crores. The MSME segment which comprises of LAP SME and SBPL recorded 11% growth in Q4 disbursements supported by strong demand and robust branch led distribution. MSME Segment AUM grew 29% year on year with LAP AUM at 52,295 crore which is a 26% growth year on year. SME AUM is at 9,338 crores which is a 41% growth and SPPL AUM is at 3,537 crores which is a 46% growth year on year.
The consumer segment delivered 45% year on year dispersion growth driven by sustained momentum across product segments with launched gold loan business dispersing 1130 crores in Q4 and quite 6 home loan disbursements saw mild moderation in in Q4 due to procedural timing factors including election related administrative slowdowns, land record digitization mismatches and localized lean marking delays in select markets which temporarily extended verification and dispersal timelines. Consumer segment aum grew at 20% year on year including 23% in home loans while Ccell AUM increased 4% despite the exit from partnership led businesses in terms of profitability, our nims improved by 40 bips year on year in Q4 driven by a gradual reduction in the company’s cost of funds as interest rates softened during the period.
Ravindra Kundu — Managing Director and Chief Executive Officer
Credit
Vellayan Subbiah — Executive Chairman
Costs before management overlay declined by 20 bips year on year in Q4 across product segments reflecting stable portfolio performance. To mitigate any negative impact on credit costs due to heightened global uncertainties, the Company has provided a management overlay for rupees 200 crores the precautionary buffer. The overlay addresses potential second order stresses arising from volatility in crude and refined fuel prices, risk of LPG supply shortfalls and supply side pressures and sectors dependent on global shipping and commodity flows, while core asset quality indicators remain resilient.
Return on assets for Q4FY26 stood at 4.1% before the overlay compared to 3.6% in Q4FY25 while return on equity for the quarter was 23% underscoring improved profitability. We hold a strong liquidity position with a total liquid asset of 21,186 crores which includes undrawn sanction lines. The ALM is comfortable with no negative cumulative mismatches across all time buckets. Our capital adequacy position stood at 19.21% in March 26 with Tier 1 capital at 14.73% out of the total issuance of 2000 crore CCDs mounting CCD is amounting 1370 crores were converted in FY26.
The balance 630 crores of CCDs is expected to be converted in the first half of FY 2017. The Board of Directors of the Company has recommended a final dividend of 70% per share which is 35% on the equity shares of the company subject to the approval of the members of the company at the ensuing annual general meeting. This is in addition to the interim dividend of rupees 130 per share, one rupee static Versa per share at 65% for the financial year FY 2526 declared by the company on 31st January 2026.
With that I’ll stop and we’ll be happy to take questions from.
Questions and Answers:
Nischint Chawathe
Sure. We’ll now start with the question and answer session. The first question comes from Kunal of Citi Kunal. You can unmute and ask a question.
Kunal Shah
Hi, thanks for taking the question. So looking at this outlook, no doubt we have created this overlay buffer but if you can guide in terms of how we are looking at the trajectory getting into FY27 and both with respect to AUM growth as well as credit cost. If you can indicate in terms of how the outlook will be and anything particularly on the vehicle finance side or any of the segments wherein we would have tightened the credit filters or improved the screening out there, how we are. How we are incrementally looking at these segments.
Yeah.
Ravindra Kundu
So first of all the credit filter side I would like to mention that we have been continuously working to improve the Gini coefficient of the underwriting tool working for the all the eight division. So that will help us to improve further improvement in credit cards. But in this financial year we are still holding our growth trajectory between 20 to 23% what we have been committing and we are still hoping that our net credit cost will go down from 1.6% pre overlay to 1.5 and our rotage should improve then closer to 3.5% pre tax ROA which we have been discussing that.
Kunal Shah
Okay, got it. So you mentioned like in terms of the credit filters we have. Sorry, I didn’t get that. Exactly.
Ravindra Kundu
We have been working on the improvement of underwriting tool which is a Gini coefficient and that is actually decide the accuracy of the decision taken by us. We are working along with all the trade managers of the company for each division to improve that. That has been there for last one year and that has actually helped us to improve quality of the C cell CD and vehicle finance during the quarter four and which is going to be continued even in the next financial year.
Kunal Shah
Okay. And that should help the overall credit cost trajectory of 1.5 odd percent.
Ravindra Kundu
Yeah, it should help us to get that number.
Kunal Shah
Okay. And no need for any further overlay. This doesn’t include any overlay buffer as such we believe like 200 odd crores which we have done. That is sufficient enough taking into consideration the current dynamics which are there.
D. Arul Selvan
Yeah. It is itself is a more precaution considering will there be any heightened credit cost of the settlement. So as we talk now, there is no.
Kunal Shah
Perfect. Yeah. Thank you.
Nischint Chawathe
Yeah. Raghav, Gargo, Ambit, you go next.
Raghav Garg
Okay. Am I audible?
Nischint Chawathe
Yes, yes, yes. Okay.
Raghav Garg
So I just want to understand, see for April 26, you know these two key OEMs, Tata and Aisher have reported fairly good growth in their CV volumes. Now should that be taken as a proxy for how the on ground sentiment is amongst the CV operators that despite the war and despite the, you know, the disruptions that have been there domestically, they are still going out there and buying trucks because they see the good demand for transportation or do you see some Risk to CV sales momentum sustaining, you know, in the near term or even in the medium term.
And that could be a risk, you know, to your growth guidance or estimate. That’s my first question.
Ravindra Kundu
Yeah. See, not only commercial vehicle segment is passenger vehicle. Also has shown the good number in the month of March, April and we have been, we, we got the opportunity to see our number also. So our number with respect to sales credit collection as compared to the April 2025 has been very good. So as of now the on ground any, you know, we have not seen any change in behavior.
Raghav Garg
Understood. So what you’re essentially saying is that despite all those disruptions and the narrative being that there is a lot of risk and I think rightfully so, you’ve also taken some management overlay. There is nothing on the ground, at least in terms of data that would suggest that things are deteriorating. Is that understanding correct?
Ravindra Kundu
Absolutely, absolutely
Raghav Garg
That is correct. Okay, my second question is that for FY26, can you give me the total recoveries cost? This Same number in FY25 was 441 crores. What was this number for the full year? FY26. And then I have a follow up question on this.
Ravindra Kundu
So maybe we’ll come back after seeing the number. And then you also ask the question we are ready. So
Raghav Garg
What I wanted to ask is that you know, typically what we’ve seen is that in years when there is asset quality pain, the recoveries cost grow at a higher rate versus say the overall business growth or you know, the overall OPEX growth. I am assuming that it would have been the case this year also. But with the asset quality improving in FY27, your recovery cost growth should be much lower or it may not increase at all. Could that be one of the levers to your OPEX ratio improvement next year? I just want to get you know, your thoughts on this.
Ravindra Kundu
See, I think you’re asking about the collection cost in terms of percentage to the asset. And if you see that the collection cost is a part of the total operating expenses and total operating expenses has been fairly at the same level. It is at 3.1% compared to last year of 3%. So nothing has gone up in the, in the operating expense. In spite of we have opened up gold loan business and also we expanded in consumer durable, that shows that the recovery cost has not gone up, recovery has improved because in the quarter 3, quarter 4, we have seen that capacity utilization has improved.
And also we got the opportunity to get, you know, resolution through surfacing in the market
Unidentified Participant
Side.
Ravindra Kundu
So both Put together, the collection efficiency has improved. Another important thing, we have been continuing saying that our stage two has been improving throughout the year. Stay quarter three, quarter two onwards. That shows that the, you know, in general the you know, customers payment repayment capability during the year for the customers who are in zero to those who are in 31 to 60 and 61 to 90 were actually good. And that’s the reason stage two has come down. And finally stage three has also improved in last quarter.
Raghav Garg
Understood, thank you. Do I have opportunity for one more question or.
Ravindra Kundu
Please go ahead.
Raghav Garg
Okay. See when I look at your total gold loan aum and then when I divide that by the total active customer base in the gold loan segment, that comes out to be some 5,6 lakh rupees of exposure per customer. I just wanted to get some sense on what kind of ticket sizes you are doing in gold loan segment and what kind of yields are you charging to customers. I just want to get you know, a comprehensive color on the kind of customer segment that you’re targeting and, and, and how are you positioning yourself versus the other gold loan NBFCs?
Ranjit Ramachandran
Yeah, so, so if you look at it, our average ticket size for a loan in Q4 has actually come down from, you know, when we started it was around 3 lakhs. Now it has come down to 2 lakhs. So we are getting more granular in terms of our acquisition, you know, strategy. So yes, I think in gold loan typically what happens is that customer takes more than more than one loan. Right. So typically when you look at a total customer exposure, it, it could anywhere vary between 5 to 6 lakhs per customer. But in terms of the average ticket size, you know, at 2 lakhs.
Now coming to the, you know, you’re saying that
Raghav Garg
Even your customer would have around 1 1/2 to 2 loans
Ranjit Ramachandran
For the
Raghav Garg
Total exposure would be 4 to 5 lakhs.
Ranjit Ramachandran
Yeah.
Raghav Garg
Okay. Yeah.
Ranjit Ramachandran
So, so, so, so as I, you know, I think, you know, as I mentioned as we have always been maintaining our yield also, you know, has been, you know, very, very healthy as compared to our peers.
Ravindra Kundu
So the ticket size is 2 lakh rupee. Now it is started with 3 lakh has come down and yield has gone up to now 15. So
Ranjit Ramachandran
The yield is also very, very pretty strong in terms of, you know, it healthy as compared to our competitors. So if you look at, if you look at our strategy is to get as much granular as possible, get into more of the retail customers and we have been successful in doing that over the last nine months. Of operations.
Raghav Garg
Understood. Thanks a lot for all the answers.
Ranjit Ramachandran
Thank you.
Nischint Chawathe
Yeah. Viral from IFL you go next.
Viral Shah
Yeah. Hi. Thanks for the opportunity and congrats on a good set of numbers. I had two questions so one is on the CSAIL piece. When I see our segmental numbers I think we are now starting to see a genuine turnaround I would say on the asset quality as well as I think we are getting our growth over here. Can you just highlight what is now incrementally you are looking at this segment in terms of say the growth potential number one and number two is I see that the expense or the OPEX levels also have gone up in this quarter.
Where are we investing in terms of distribution, which product segments and what can be a steady states an ROA outlook for say FY27 and 28 in this segment and whether it will be to what degree and extent ROA accretive. So that’s my first question sir.
Ravindra Kundu
So CSAIL now is a has got two businesses. One is unsecured personal loan, business loan and professional loan. One side, another side is a CD mobile lending and also direct to customers is online in house fintech. So these are the two businesses we are doing it. You have seen that our loan losses has come down to 5.2% in the quarter four and that is going to continue to further improvement. So that’s. That’s the reason if you take 2.3% ROA of the quarter four it should definitely cross 3% ROA pre tax ROA in the financial year which is going to be due to further improvement in the loan losses.
And also the NIM also should improve because of the consumer also growing. That is the one thing in terms of growth. The disbursement growth has been 39% in quarter four which is going to be continued because quarter one, quarter two we had low base benefit. The important is the asset growth which is now just started to grow. So it is now at a 4% level. We are expecting that by the end of this financial year the C cell both put together unsecured PLBL and professional and CD Gold CD and digital and and mobile put together should be you know at least in the quarter four we are expecting that start hitting 20 asset growth
Unidentified Participant
Operating
Ravindra Kundu
Expenses is basically high in the quarter four because CGTMS insurance we have paid and now in the this financial year also we are going to pay which is going to get distributed over the across all the quarter. So this impact of 6% will not be there. It will go down to the level it was 4.5%. So that’s how we are expecting that there’s going to be improvement from operating expenses as well as the net credit cost which. Which. Which will help to increase the ROA from 1.6% of this financial year to 3% or more.
Viral Shah
Got it sir, very clear. And just as a I would say extension to your response. You mentioned that you have paid premiums for the cgts me in this pool. So what percentage of our the BL over here will be covered by this insurance?
Unidentified Participant
As of now we have covered around 70 percentage of our assets and no we’ll continue to improve that. Probably we may go up to 80, 82 percentage. That is what our plan is to cover the asset in. In unsecured business.
Viral Shah
Okay. And this will be around 1012,000 crore asset right in the X of CD business.
Unidentified Participant
No, it will be around. No it is only BL portfolio that we are going under CGTMSE and it will be around no. 3000 to 3500 crores.
Ravindra Kundu
Yeah. So as I mentioned that it actually include PL professional in one side and other sides CD mobile and D2C. So the BL part is actually 5000 crore, isn’t it? Of that 80% is around 3500. Yeah,
Viral Shah
Got it sir, very clear. And sir my the second question is with regards to on the asset quality front in April you did highlight that you are not seeing anything say from a customer or the borrower behavior. If you can just throw some light in terms of how are your bounce rates trending and is this basically across the segments vehicle finance and also the home loan lap. If you can just give some color over there qualitative as well is okay.
Ravindra Kundu
See the. The most biggest benefit has to come from vehicle finance, isn’t it? So I think Balraj is the right person to talk about it. What he has seen actually in the month of Israel. See
Unidentified Participant
We have just closed April 23 things. The early defaults non starters. Compared to 24 April, 25 April we are much lower in the month of April 26. Even this is almost at par with April, March 24 and 25 numbers and we have not seen much of a deterioration. Normally April, March to April there is some some level of deterioration but this month this here it has been better. Second thing even in the first cut NCL numbers are lower than last April. That’s where we are.
Viral Shah
Got it. This is super clear sir. Thank you so much and all the very best.
Ravindra Kundu
Thank you.
Viral Shah
Thank you.
Nischint Chawathe
Next question comes from ABHIJIT from Motila Roswell.
Abhijit Tibrewal
Yeah. Thanks Nishant. Hi sir. Good morning sir. Just on the ROA tree, I mean last two years I think we’ll also acknowledge has been particularly tough especially from the vehicle finance side. But last sir just mentioned that in April 2026 non starters have been much lower than what we saw in April of last two years. So just trying to understand versus ROAS of 2.3 2.4% that we’ve seen the last two years. You’ll remember when we had started these newer business lines the whole idea was to get to better roas over a period of time.
I acknowledge last two years on the NCN line has been higher. Now I mean when you said that this year FY27 we should look at a credit cost of 1.5%. Just trying to understand which segments vehicle being one CCEL. You’ll remember last year we were incurring higher credit costs on that book which was originated through fintech partnerships. So just trying to understand, I mean what all levers will we have on on the ROA tree which can lead to an ROA expansion this year, next year.
D. Arul Selvan
This is a role. So what will happen NIMS will hold at same similar levels at around 8. What will happen is the newer businesses will give better yield. But that may get offset on a conservative basis by a slightly higher cost of funds that may happen over the full year of FY27. So I am looking at 8% NIMS to hold. Because of these two combinations. Opex will be in the range of around 3% to 3.1%. So that would more or less again remain same. The saving will come from NCAA which will come from vehicle finance as well as C cell.
As you rightly said, these two coming through will get you the 20 basis points comparison. See today we are at 3.3 after considering management overlay of around 9bps. So that if you remove our current NCL is 1.6. Even if we do 1.5, we should be easy at the 3.5% pre tax rotor number. Yeah,
Abhijit Tibrewal
Got it. And sir, while you’re here just wanted to understand, I mean what will be the approach to ARCS in the coming years? Basically trying to understand this C SV12 book that we have. That is not something where we can apply surfacing. So what will be the approach to ARCS in that business?
D. Arul Selvan
Our focus would be to use ARCS wherever we are not able to live. Any loans which are offered less than 20 lakhs number whether it is from home or SVPL or you know these are the two broad businesses SME and they’ll have ticket sizes at larger so they. They will certainly increase rpc. So they may not go for the ARCS in the. In that context.
Abhijit Tibrewal
Got it. And thank you. Thank you sir. And last question is for Ravi sir. Sir, just trying to understand within the vehicle financing book various sub segments. I mean you mentioned earlier April trends are looking good. But are there any product sub segments or geographies where you are seeing anything unusual or everything is is as per expectations. And till now we have not seen any impact of the war. So
Ravindra Kundu
For last three years we have been going through the problem either from the geography point of view or the product point of view. And that is why we were saying always that it is a you know down cycle of vehicle. And that is what impacted the vehicle sales. Whether it is a small ticket size loan like the Tatas type of vehicle which is the small commercial vehicle or light commercial vehicle, even heavy commercial vehicle. So all segments got impacted. And from Q4 onwards it is started improving.
Now even in the month of April we see that the demand for the vehicles are still holding. And as Balraj mentioned that all the delinquency with respect to the early default non starter with respect across all product segment things are looking better.
Unidentified Participant
We
Ravindra Kundu
Have been saying that we will gain little bit market share also with the in the vehicle panel because things are looking better. In the last year we said that so it is continued. And I will say that last year when we started we were having three engine of Chola lab, SBPL and hl. They were driving the growth. Now all eight engines are driving. So that is what is our comfort level. And we are diversified within vehicle finance. We are diversified within Chola. We are diversified in the geographic point of view.
And that will take care of the uncertainty which is there in the market.
Abhijit Tibrewal
Got it. Got it. This is very useful sir. Thank you very much. And I wish you and team Chola the very best.
Ravindra Kundu
Thank you.
Nischint Chawathe
Thanks. Next question comes from Deep of Bandhan.
Unidentified Participant
Hello sir. Thank you for the opportunity. Am I audible? Sir, one quick thing. We are at around 6.94 times gearing and guiding of growth of around 20 to 23%. So any sensor or clarity on when will we you know raise some capital if needed. And I mean how, I mean not on the quantum but any timelines for those. Because I think we have, I mean 19.2% is our capital adequacy ratio. So how much of this will be? I mean will we consume some amount of capital for growth this year? As well or our internal accrual approvals will be sufficient.
Any clarity sir on this part? And sir, one follow up on this is that any internal policy or something that we have in mind. I understand that we have been reducing gearing from 7.17, 7.17 times last quarter to 6.94 currently. So sir, any internal policy or any guidance that you would like to give for the gearing ratio.
D. Arul Selvan
Yeah, with more follow the capital adequacy ratio and we have given guidance there that if the Tire 1 ratio comes to 13 we will certainly start looking for equity. And in a situation where we are returning a 3.5% pre tax rota and growing less than 20 to three 20 to 25% we should be able to be self sufficient in providing capital. This has been our stated way of looking at capital requirements. Having said that, if there is good growth, growth opportunities we will certainly look at, you know, bringing in additional capital to strengthen the growth.
This will be done in consultation with promoters and other senior people in the organization as we move forward evaluating the market situation as well as the growth potential. So but the stated policies I’ve already given you.
Unidentified Participant
Okay, so and one, one more question. I understand we are at double A plus positive from ICRA and double A plus stable from all other rating agencies. And I mean sir, any initial talks what they have been saying to, I mean to take Chola to a different level from AA plus. So any steps that we are following there or I mean in such scenarios, I mean any. Anything that you would like to highlight on that part?
D. Arul Selvan
No, we are in discussions with them and we will keep evaluating. But as you know it is not like as you know given formula that you reach a certain, you know, numbers then they will automatically give you. It’s. It’s both a qualitative as well as a quantitative approach to the rating approach. Many of the other competition, getting the AAA, leveraging parental support, etc. But unfortunately we cannot do that because there is not any dependence of any of the parent organizations on shoulder for their funding requirements etc.
So that being the case, we continue to be able A plus from that time.
Unidentified Participant
Sure sir, I understand. I mean the positive trigger is also a qualitative one. Thank you for the input sir. All the best for the next year.
D. Arul Selvan
Thank you.
Nischint Chawathe
Next is Abhishek from hsbc.
Abhishek Murarka
Yeah, hi, good morning. So just a few questions first on vehicle vehicle loans this year. What is the disbursement and AUM growth that you’re looking at?
Ravindra Kundu
So vehicle finance we are expecting to Continue the project where we are as of now in quarter four. So that is coming to around 15 to 20% disbursement growth and around 18% asset growth.
Abhishek Murarka
Okay. And considering that there might be some disruptions even then, you’re confident that you can do this level of growth in vehicles this year?
Ravindra Kundu
Yes, yes. That is what Balraj is committing.
Abhishek Murarka
Got it. Got it. Right. The other questions the fintech book. How much of it is left to run down now?
D. Arul Selvan
300 to 400 crores. But this will be little long tail because it will run through the entire year because these are the leftovers beyond one year type of.
Abhishek Murarka
Okay. But it’s quite negligible that way. Okay. The third thing is in overlay provisions that you have made, have you changed any PD LGD assumptions and does the run rate credit cost change or this is just a one time activity and you go back to the run rate cost.
D. Arul Selvan
No PD lgd. We have not changed because if we change PDLGD then this is known over the overlay has been arrived at based on a past experience of similar situation when Covid when the diesel prices went up and you know how the delinquencies had sort of panned out at that time. Similar approach we have taken to look at what should be the overlay and arrived at this overlay. So there’s no change in the PT Ltds.
Abhishek Murarka
Got it. Yeah. Because some other NBFCs are having to change some of these core assumptions. So nothing like that. Right. The ECL model remains.
D. Arul Selvan
The PD LGD is based on past experience and past data.
Abhishek Murarka
Yeah.
D. Arul Selvan
And change the data for that past period. The past period gives me a PD lgd. There are two options to do it. One, add it to the macro or add it as a overlay. Now macro information available is again citing a much better GDP growth and much better, you know, forecast. Because this was done pre the of macro data that we rely on has come pre February before the war. That is why we said we will consider, you know, what shall I say events that happened post February to factor in this over.
Abhishek Murarka
Got IT. And CGT SME MSC the cost for this quarter would be roughly around 40 crores.
D. Arul Selvan
Yes. Around 35. Sorry, 38.
Unidentified Participant
38 crore. 38.
Abhishek Murarka
Perfect. Perfect. Just one last quick question on HL yields. Now that inter quarter movement is because of assignment and upfronting of in income or is this something else?
D. Arul Selvan
Assignment income is not given credit into the respective business portfolios. That’s separately shown and I I and we have not assigned any HL book. Also incidentally it was more other some other portfolio.
Ravindra Kundu
This
Abhishek Murarka
50 wave jump
D. Arul Selvan
Primarily coming this is coming from the ARC accounting where ARC
Ravindra Kundu
Amount
D. Arul Selvan
Is shown as income and then the NCL is high. These two nets of. Oh yeah overall data remains that’s given as a bottom page
Ravindra Kundu
Number 72 footnote is there 0.39 is the new gone up because of that?
Abhishek Murarka
Okay, got it. All right, thank you. Those were my questions and all the best. Congratulations for the quarter.
Ravindra Kundu
Thank you.
Nischint Chawathe
Piran from CLSA go next.
Piran Engineer
Thanks. Congratulations team on the very strong set of numbers. Just firstly what would it take for home loan disbursements to pick up? It’s been in this 18002000 crore range for now 78 quarters.
Unidentified Participant
So the point here is no as of now we maintain a steady growth rate of 23% on the book we see no this Q1 should be slightly better and last year Q3 Q4 we have seen the increment numbers. We crossed 2000 crores also in Q3. So we expect this year we should be clocking in 12 to 15% disbursement growth and we made a steady growth on EVM side around 25% plus.
Piran Engineer
But why has it been lagging? Like what. What will change next year for growth to pick up to 15% if I ask it that way.
Unidentified Participant
Yeah. So this is basically no we when we started disbursement four years back our penetration was only in South. So all the scale up since the last three years have come to pan India presence. So the branches we have added has started kicking in value. So the proportion of south is continuously coming down and the other areas of India we are managing it good. So we see the incremental business coming from other locations in terms of productivity hike and also the branches are getting mature. So next next year is the year where our businessman will scale up, the efficiency will go up and we’ll maintain the router of 4.2 plus.
Ravindra Kundu
See one thing which we mentioned in the note itself in the beginning Chairman said that there has been some delay in completing the documentation into the election because there are two state in the south elections are going on. So that has actually reduced the both in disbursement of Lab and Excel but that is not impacting the overall asset growth. So we are quite confident that we will be clocking 25% plus asset growth in the HL and LAB. And as well as there are two more mortgage businesses we are having SVPL and SME there the growth will be higher than 30%.
So put together the mortgage business growth are going to drive the overall growth of the company. And new businesses like csail, CD Gold are also supporting that. That’s the reason we are saying that we are quite comfortable in, you know, holding our commitment of growth of 20 to 23% for a company level.
Piran Engineer
Understood. So secondly on vehicle finance just wanted to understand. Let’s say fuel prices go up 10% tomorrow. How much do you need to increase freight rates to offset that and maintain steady profitability per truck?
Ravindra Kundu
There are two types of customers. One is the and especially for the heavy commercial vehicle segment alone. One is that any commercial vehicle segment in our business is only 5 to 7% which is a very small percentage. Rest of the businesses are small commercial vehicle, light commercial vehicle, passenger car, construction equipment. Where the fuel doesn’t impact much. The impact only the heavy and within the heavy it impact only the long haul transporter who are burning more diesel because they run say 300 kilometer on an average in 20 days they they will run for 6000 kilometers and fuel efficiency is 3 kilometer per liter.
Then they will have to buy 2000 literally. And if the diesel prices goes up by 20 rupees which is 20% or maybe slightly higher than that and 25% then they will have to spend 50,000 extra. Now total income after paying all kind of thing in the long haul transportation is one lakh rupee. So that one lakh rupee even after 25% goes up they will actually have a saving of 50,000 rupees. That will impact their standard of living definitely. But then it doesn’t impact the EMI payment and other repayment.
That’s one. So that is applicable for long haul transporter. Long haul transporters are fleet operator. We are into this small transport operator who are operating within the city or within the state. So therefore passing on the the freight which actually you know, increased diesel prices is easy for them. Those who are working under contract, you know, large fleet operator with the contractor or low load provider. For them it is not easy immediately. So what we see that actually because of the heavy commercial vehicle portions are very small for us and also more asatio diesel prices increase will not have very highly impact.
Our problem is demand. If the demand is there, the load is available then it will be easy for everyone to pass on the prices.
Piran Engineer
So but one fundamental question why will fuel price not impact LCV operators? Is fuel cost a smaller proportion of the revenue then they
Ravindra Kundu
Are not covering? They are not running 6,000km. Their run is small lead. They run and also market load operator. They Take load from the open market and they pass on e daily pricing. It’s like a daily pricing. It is a daily pricing. It is not a fixed pricing which you have to work out a particular way.
Vellayan Subbiah
Yeah, no, in, in heavy is the, you know, the buyer of kind of logistics has much more clout, basically.
Piran Engineer
Okay, Okay, fair. Just secondly, and this is probably very qualitative, but which of the end segments are more, you know, price sensitive or price elastic? As in, for example, if freight rates go up 20% tomorrow, where will we see a drop in demand because of the freight rate rise? So for example, if I am shipping iPhones and the freight rates go up 20% there’s obviously not going to be a drop in demand because the freight cost is a minuscule proportion of the iPhone cost. But there’ll be many other sectors where this would lead to some sort of elasticity of demand.
So if you could just maybe touch upon this qualitatively, that’ll be useful.
Ravindra Kundu
See actually what you are saying, the phrase goes up, freight goes up only when the demand is there. The demand is there, freight cannot go up, isn’t it? So that is what is the basic thing. If there is a demand, if the loads are available, the only transporter can ask for more freight. That is the point. One point number two is that the transportation cost doesn’t impact the demand. It is actually more the bare inflation if they have. I
Vellayan Subbiah
Think Piran’s question is on end segment your answer actually your analysts colleagues and other sectors will be able to give you the best answer because basically the data point you need is what is logistics cost as a percentage of the overall revenue associated with the product. Right?
Piran Engineer
Correct. Exactly.
Vellayan Subbiah
Now we know that in some heavy infrastructure sectors, logistics costs can be as high as like 22% or even like 24% of total cost structure. So obviously those. And I think you, you, I mean your, your analyst colleagues will easily be able to give you that breakdown and that analysis is fairly simply available as to what is logistics cost is the percentage of overall cost of the sector. But I think broadly we know, right that the heavier infrastructure sectors have a higher logistics cost as a percentage of cost.
Already
Piran Engineer
Understood. Okay, I’ll take it offline for further details. Thanks and congrats on the quarter once again.
Unidentified Participant
Thank you.
Nischint Chawathe
Thank you. We have a large. Yeah, we have a large participant list for questions. So my suggestion is just to keep, you know, keep it brief and maybe one or two questions. Subranshu from Philip Capital, you go next.
Shubhranshu Mishra
Thanks Christian. Good morning sir. I will tell two Questions? The first one is the growth number that he gave that’s on the dispersement. So if you can split this number into a business wise. I think you’ve already given for vehicle plan for rest of the businesses. If you can split this growth for 27 what kind of growth we can look at for each of the businesses. Second is how many people do we deploy in collections and if again if we can split that business wise. Thanks.
D. Arul Selvan
I can’t give you business wise this data. These are not, you know we have given a lot of data against the total number of
Shubhranshu Mishra
People in collection sir.
D. Arul Selvan
Number of people we we can give you that is around 30000 people we have on the collections that, that, that is there but independently each business wise is very difficult to share because that, that’s not. That’s. That’s
Shubhranshu Mishra
Fair sir. That’s fair. I’ll take it offline, thanks. The first part of the question sir, the growth numbers.
D. Arul Selvan
Growth numbers also we have given you AEM growth only AM growth we have said it will be between 20 to 23% as we have talked about earlier and independently I think vehicle finance we have said 18% growth and LAP and HL will be you know growing in the about 25 to 30% level. The rest of the business which are new because the base is low will actually clock a larger, you know, percentage but there would average out to the 20 to 23% I spoke about.
Shubhranshu Mishra
Right. And if I can just squeeze in one last question sir. If I look at the lab PBT as a percentage of total PBT so it’s roughly at around 30, 31% which is quite high versus the rest of the previous five six years earlier it used to clock anywhere between 19 to 22% and this is a huge spike. So any reason it is here or we are likely to see this come off if you can elaborate on that will be great sir. Thanks.
D. Arul Selvan
So they have been growing their book quite, you know decent growth and you know costs on the credit also low. So that’s good and we are quite happy about that and we like to continue that
Shubhranshu Mishra
It’ll stay at around 30%. Yeah, right, right. Thank you so much.
Nischint Chawathe
Thank you. The days from Investec you go next.
Nidhesh Jain
Thanks Nashant. So my question is on branch addition what are the plans to add branches in vehicle, home equity and home loans in FY27?
Unidentified Participant
So the point here is we are, we already have the vehicle finance branches. The only for us via is the extension of putting manpower. We are planning around 60 new branches in Q1 and Q2 40. So 100 branches in home loan will be in next financial year.
D. Arul Selvan
These will be shared branches of vehicle finance. Unique branches would be the Gold loan branches which should be in the range of around 300 plus
Unidentified Participant
Will always be part of the BFP.
D. Arul Selvan
All the other businesses would mostly be in the vehicle finance branches. Vehicle finance branch by itself would go up by around 100.
Unidentified Participant
Basically for the other divisions it’s deployment of manpower in the branches which will create the new branches.
Nidhesh Jain
Sure. 100 in VF and then probably 300 in gold. That will be the branch addition
D. Arul Selvan
Where other branches other would also start participating. Each of them would start participating in existing VF branches and their growth. Like what Prashant said and Suresh, they will start operating out of existing VF branches where they are currently not operating.
Unidentified Participant
The count would be 100 in HL and 100 in Lakh.
D. Arul Selvan
100 in Natural and. Yeah. So don’t add up all the numbers to arrive at the total number of branches for Chola. That’s what I was trying.
Nidhesh Jain
Sure. Thank you sir. That’s it for myself.
D. Arul Selvan
Thank
Ravindra Kundu
You.
Nischint Chawathe
Just a clarification. Gold branches addition is 300 and what is the current base?
Ravindra Kundu
Cold load is starting 360 more today they are at 120. 120480 lab will increase 100. Similarly C cell and CD are also likely to use 100 branches more. Semi is going to go up by 20
Nischint Chawathe
And. And gold tends to be exclusive, right? I mean there is no sharing of branches
D. Arul Selvan
Exclusive. Rest of them will
Nischint Chawathe
Perfect. The next question comes from Sripal of Aquarius. Sripal, you can unmute and ask a question.
Unidentified Participant
Congrats on a good quarter. My question was on vehicle finance front. So within that HCV has seen a very strong growth this quarter. Are we seeing similar trends in April as well? And how is the competition from banks in this particular segment? Especially on the newer segment.
Unidentified Participant
So as of now in the month of April as we have grown across all the segments, we have grown in passenger vehicle, we have grown in two wheeler. We have grown in heavy commercial vehicle and LCD across the product we have seen and we have been able to increase our market share.
Unidentified Participant
Okay. And on the competition from bank, if you could give some color then
Unidentified Participant
As of now when since we have grown, we’ve
Ravindra Kundu
Not seen. Actually it is similar level at where it was.
Unidentified Participant
Okay, okay, got it. And say is that the trend in the newer segment as well? Because I mean PSU banks were hurt. You know, they’ve become very aggressive in that particular segment. So we Are not seeing anything for us.
Ravindra Kundu
They are into passenger. We are
Unidentified Participant
Not seeing any significant shift in the competition behavior in the last four to five months. And in April also there has not been any changes.
Unidentified Participant
Thank you. Thank you for answering my question and good luck for the next one.
Unidentified Participant
Thank you.
Nischint Chawathe
Apparently, as per CMI data, freight rates have already gone up in April versus March. And apparently, you know, some of the. Some of the. Some of the data suggest 10% month on month growth. So is this something which is to do with demand or is it something, you know in anticipation of fuel prices?
Ravindra Kundu
Demand also prices as of now, diesel prices are same level.
Nischint Chawathe
Demand has been strong in April. Yeah, sorry, I’m not sure if you’re audible. You’re saying demand is strong in April.
Ravindra Kundu
Yeah, demand has been strong in the April. The prices have not gone. So fuel prices cannot be reason for increasing the freight.
Nischint Chawathe
Got it? Yes. So this was the last question. We don’t have any further participants in the queue. Anybody who wants to ask a question can raise their hand. So I think yeah, that’s it. We are done. Thank you very much participants. Thanks management for giving us an opportunity to host the call. Okay, we have a question from Harshit. Can we take that if. Yeah, yeah, yeah. Harshit. You can. You can ask a question. Yeah,
Unidentified Participant
Sure. The question. The question was on the cost growth itself. So when we look at FY26, our employee cost was around 27% but going forward obviously we want to invest in gold loan and we want to invest in newer businesses. But how should we look at the overall cost growth versus the AUM growth? And yeah, I think on net basis should we. Should it now start tracking AUM growth or we should start getting some operating leverage out there?
D. Arul Selvan
I think it will take another year or so to get any operating leverage because we are adding new branches for most of the. We just spoke about it. So we will still continue to hold it at the 3% overall to the average assets. That’s what we are. So sometimes we are. But I think we should work at right now. I wouldn’t want to factor.
Unidentified Participant
Got it. Good. So the idea was to just check because given in gold loan assumption was that typically the breakeven periods are shorter compared to non gold loan businesses.
D. Arul Selvan
Large amount of capital investment. These are exclusive branches and then people have to be recruited. And people have to be recruited. Unlike vehicle finance, it will not be people who are, you know, new or raw. Yeah, we need to bring in experienced people from. There are other initiatives on the IT side which is on the AI Side which is also bringing in larger cost. So I, I I think let’s not count too many now ahead of what we are
Unidentified Participant
Understood s got.
D. Arul Selvan
Sure.
Nischint Chawathe
We’ll we’ll take the the last question from Bunty Chawla.
Bunty Chawla
Okay. Thank you for the opportunity. Am I audible?
Nischint Chawathe
Yeah, go ahead
Abhishek Murarka
Please.
Bunty Chawla
Yeah, yeah. Thank you. Yeah. So as we have seen new business part or CSL which we were struggling with respect to asset quality and all are doing good now we are confident on that vehicle financing was a some bit of a pain in terms of asset quality that is now out and growth. We are very much confident in vehicle financ and already we in terms of West Asia crisis if you’re seeing you are saying already we have overlay of 200 rupee 200 crores on the credit cost per say so then too we are still guiding for credit cost as a whole from 1.6 to 1.4.
If we go with the history we have been in the range of 1 to 1.4. So what still getting us to still give a credit cost guidance of just 1.45% we can easily touch 1.4 with respect history. So what is that creating us back or are we being conservative in that sense? If you can share some bit of a thought process on that.
Ravindra Kundu
1.5% is the you know idea for this year. So from from 1.5 if we get it then again next year we have to reduce it to 1.4. So everywhere we have to improve upon. So we don’t want to take more target from you all you have to achieve every year. Let us see that how much we can do this year. And based on that we will try our level best to do the you know across the t shirt has started just improving. Another thing is that we need to understand the high yield business which is C cell, CD then digital as well as mobile all are having little higher net credit cost by design and if they are growing then that higher credit cost also will be there.
At the same time mortgage businesses are having a lower credit cost and then we have vehicle finance which is an average so all three segment we need to look into it and then arrive at a actual credit cost which is going to be standard for us. Like in the past it used to be 1 to 1.2%. You need to define that but that can be defined within next one and a half years or two years down the line once all eight businesses are set. As I mentioned all eight businesses started doing well. If we work for another two years we will come to the conclusion that what would be our future ROA and what would be your future NCL as of now, let us actually hold it at 1.5% for this financial year.
We will try to do better.
Bunty Chawla
That was very helpful. Thank you. And best of luck for next year.
Nischint Chawathe
Perfect. Thank
Ravindra Kundu
You. Yeah,
Nischint Chawathe
Perfect. That was the last question. Thank you very much for joining us. Thank you, management for giving us an opportunity to host the Call. Thank you.
Ravindra Kundu
Thank you. Thank you. Thank you.