Cholamandalam Investment Q1 net rises 37% to Rs 431 cr on lower expenses

Diversified financial services company Cholamandalam Investment and Finance on Thursday reported a 37 per cent jump in net profit at Rs 431 crore in the quarter ended June, driven by lower expenses.

The company had posted a net profit of Rs 314 crore in the same quarter of last fiscal.

"The profit was high as our expenses were low during the quarter. Also, in the fourth quarter of FY20 we had provided Rs 534 crore related to COVID-19 and macro, and so in the June quarter we did not have much to provide for," the company's executive vice president and chief financial officer Arulselvan D said.

The total additional provision for COVID-19 and macro is now at Rs 551 crore as against Rs 534 crore as of March 2020, the company said.

Its opex ratio came down to 2.2 per cent in the quarter from 2.6 per cent in the previous quarter.

After the reopening of economy post May 15, Cholamandalam Investment's operations have gradually resumed and demand has seen an improvement, with the company seeing a pick up in disbursement.

Aggregate disbursements for the quarter ended June stood at Rs 3,589 crore as against Rs 8,572 crore in the year-ago quarter.

Disbursements in vehicle finance (VF) business declined 53 per cent year-on-year (YoY) to Rs 3,231 crore in June quarter as against Rs 6,940 crore a year ago.

Disbursements were predominantly in tractors, two-wheelers, construction equipment and used business segments.

Loan against property (LAP) business disbursed Rs 119 crore as against Rs 1,101 crore in the previous year, registering a decline of 89 per cent YoY. Home loan business disbursed Rs 190 crore as against Rs 420 crore a year ago.

Assets under management grew 13 per cent to Rs 70,826 crore as compared with Rs 62,827 crore in the same quarter in FY20.

Arulselvan said nearly 74 per cent 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.

"We have around 50 per cent of our moratorium customers repaying partial or full instalments," he said.

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.

Its asset quality as on June 30, represented by stage 3 assets, stood at 3.3 per cent with a provision coverage of 41.6 per cent as against 3 per cent in the same period last year with a provision coverage of 36.2 per cent.