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Informist, Wednesday, Apr. 29, 2026

 

By Aaryan Khanna

 

NEW DELHI – Cholamandalam Investment and Finance Co. Ltd. is expected to post healthy on-year growth in its net profit for the March quarter on the back of improving asset quality and margins. The non-banking finance company is expected to remain an industry leader in loan growth though high operating costs, as in the December quarter, may eat into its profitability, according to analysts.

 

The financier is expected to post a net profit of INR 15.03 billion for the reporting quarter, up nearly 19% on year and over 12% sequentially, according to an average of estimates from 11 brokerages. Kotak Securities Ltd. has the highest estimate for the net profit at INR 16.14 billion while Equirus Securities Pvt. Ltd. has the lowest estimate at INR 14.12 billion. Cholamandalam Investment is scheduled to declare its earnings for the quarter and financial year ended March Thursday.

 

The non-bank lender's net interest income is likely to rise nearly 28% on year to INR 38.98 billion, according to the average of estimates. Sequentially, the growth is seen at 9%. Analysts said its margins are likely to be flat or rise slightly from the December quarter but gain significantly by 10-40 basis points on year.

 

"Expect 5-10 bps improvement in CoF (cost of funds) in Q4; high opex (operating expenditure) spend in new businesses is likely to be offset by an improvement in productivity," Prabhudas Lilladher Pvt. Ltd. said in a pre-earnings report.

 

Most analysts expect Cholamandalam's assets under management to grow 20-22% on year as on Mar. 31, in line with management guidance, led by financing of new commercial vehicles following the goods and services tax cut implemented in September. Nuvama Wealth Management Ltd. was a positive outlier, predicting 25% growth, while Nirmal Bang Equities Pvt. Ltd. saw only 17% on-year growth. In FY25, the company's business assets under management had grown 27% to INR 1.85 trillion as on Mar. 31.

 

"CIFC (Cholamandalam Investment) (is) the fastest on AUM growth basis yet slower than its own historical trend," Nomura Equity Research said in a note. "Even then, it is important to note that CIFC's AUMs are now growing at the 1Q23 (Apr-Jun 2022) growth rate of early 20s."

 

Importantly, the diversified financier is expected to bring down the share of bad loans in its portfolio in the March quarter. YES Securities Ltd. said interactions with the management suggest there was no impact of the West Asia war on collections in March and the seasonal pullback in asset quality is expected to be better in the reporting quarter than in the year-ago period. The company's credit cost is seen improving to 1.3-1.7% on an annualised basis from 1.8% in Oct-Dec. In the year-ago quarter, its credit cost--a measure of asset quality--was 1.4%.

 

"While credit cost was elevated in H1 (Apr-Sept), it is now moderating with lower delinquencies in VF (vehicle finance) and run-down of the CSEL (Cholamandalam Consumer and Small Enterprise Loans) portfolio," Prabhudas Lilladher said.

 

Going ahead, brokerages expect the impact of the war in West Asia to drive up Cholamandalam Investment's bad loans while also weighing on its margins and disbursals. The Chennai-based non-bank lender may be among the worst-hit of its peers, especially with its significant exposure to the transport business due to its large vehicle financing unit and from its lending to micro, small, and medium enterprises. 

 

"Among our coverage... Cholamandalam... (faces) the most acute earnings risk from MSME cluster disruption and the freight squeeze," Nirmal Bang said in apre-earnings note. "Consequently, while we see credit stress emerging in Q1 (Apr-Jun), the full impact of elevated credit costs is expected to manifest in Q2FY27 (Jul-Sept)."

 

Shares of the company have fallen nearly 5% since it declared its earnings for the December quarter on Jan. 30. At 1415 IST, the shares were 1.6% higher at INR 1,561.60 on the National Stock Exchange.

 

Of the 12 brokerage reports on Cholamandalam Investment available with Informist, eight have a "buy" recommendation on the stock with an average target price of INR 1,827, an expected upside of 18%. Three brokerages have a "hold" or equivalent call while one has a "sell" recommendation. The stock was a top pick for Equirus Securities Ltd. and JM Financial Services Ltd. in their pre-earnings reports, and was preferred by Kotak Securities Ltd. and YES Securities. Nuvama had a negative outlook on the scrip based on its earnings. 

 

Following are the Jan-Mar earnings estimates, in INR billion, for Cholamandalam Investment and Finance Co. from 11 brokerages in descending order of the net profit estimate:

 

Brokerage	Net Interest Income	Net Profit
Kotak Securities Ltd.	38.10	16.14
Nirmal Bang Equities Pvt. Ltd.	38.12	15.91
YES Securities (India) Ltd.	45.15	15.40
Motilal Oswal Financial Services Ltd.	38.66	15.24
JM Financial Institutional Securities Pvt. Ltd.	38.16	15.16
ICICI Securities Ltd.	38.07	14.97
Nomura Equity Research	39.12	14.97
Prabhudas Lilladher Pvt. Ltd.	38.30	14.59
Nuvama Wealth Management Ltd.	38.70	14.50
Emkay Global Financial Services Ltd.	38.38	14.31
Equirus Securities Pvt. Ltd.	38.05	14.12
Average	38.98	15.03

 

End

 

Edited by Rajeev Pai

 

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