Earnings Outlook
Cholamandalam Invest seen sterling in Oct-Dec on AUM boom
This story was originally published at 21:20 IST on 30 January 2025
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By Aaryan Khanna
NEW DELHI – Cholamandalam Investment and Finance Co. Ltd. is set to be an outperformer among non-banking financial companies in terms of its Oct-Dec earnings. The vehicle financier's profit is seen surging on year, backed by industry-leading growth in assets under management and stable margins.
The lender's net profit is seen increasing nearly 20% on year to INR 10.50 billion for Oct-Dec, according to the average of the estimates of nine brokerage houses. Sequentially too, the net profit is seen rising 9%. The company is set to detail its Oct-Dec results on Friday.
Anand Rathi Share and Stock Brokers, JM Financial Institutional Securities and Sharekhan all count it as a top pick for the reporting quarter. The brokerages' confidence comes from assets under management growing around 30% on year, which Nomura said was the highest among the non-banking financiers covered by it.
"We expect disbursement growth for vehicle financiers to remain healthy, translating into strong asset-under-management growth," Axis Securities said in a pre-earnings note. "We do not expect asset quality trends to be worrisome and credit costs are likely to remain under control."
This will help net interest income jump nearly 40% on year to INR 30.30 billion, according to the average estimate of the nine brokerages. Meanwhile, the cost of borrowings should remain under check in Oct-Dec, keeping the net interest margin stable on a sequential basis. In fact, Motilal Oswal Financial Services Ltd. expects Cholamandalam to buck the sectoral trend and set its net interest margin expand.
"Chola(mandalam) will likely report strong 5.9% quarter-on-quarter AUM growth in Oct-Dec (30% yoy)...reflecting high growth across business lines," Kotak Institutional Equities said in a pre-earnings note. "NIM will likely remain stable quarter-on-quarter at 6.85% as cost of borrowings peak out."
Even if the cost of funds had risen in the reporting quarter, Nomura expects Cholamandalam's improved traction in high-yield small and medium-enterprise offerings, and used vehicle loans to offset the impact on net interest income. Key monitorables for brokerages were the sustainability of the growth in assets under management, as well as the outlook on its asset quality, credit costs, and new segments.
Following are the Oct-Dec earnings estimates for Cholamandalam Investment and Finance based on reports from nine brokerage firms in descending order by the estimate of net profit:
Brokerage firm | Net interest income (in INR million) | Net profit (in INR million) |
| Anand Rathi Share and Stock Brokers Ltd. | 34,219.00 | 11,083.00 |
| JM Financial Institutional Securities Pvt. Ltd. | 28,559.00 | 10,894.00 |
| Kotak Institutional Equities | 28,831.00 | 10,730.00 |
| Motilal Oswal Financial Services Ltd. | 29,099.00 | 10,697.00 |
| Sharekhan Ltd. | 28,350.00 | 10,490.00 |
| IDBI Capital Market Services Ltd. | 32,771.00 | 10,459.00 |
| Nuvama Wealth Management Ltd | 28,600.00 | 10,200.00 |
| Axis Securities Ltd. | 28,940.00 | 10,120.00 |
| Nomura Equity Research | 33,300.00 | 9,800.00 |
Average | 30,296.56 | 10,497.00 |
End
Edited by Avishek Dutta
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