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Informist, Tuesday, Jul. 28, 2026

--Cholamandalam Invest: Expect credit cost to improve in coming quarters 

--CONTEXT: Cholamandalam Invest mgmt comments at post-earnings analyst call 

--Cholamandalam Invest: Plans to add over 300 branches in FY27 

--Cholamandalam Invest: Expects new branches to become profitable in FY28 
 

By Vaishali Tyagi and Diksha Tripathy

 

NEW DELHI – Cholamandalam Investment and Finance Co. Ltd. expects credit costs to improve in the coming quarters. The non-banking finance company has targeted a net credit cost of 1.5% for 2026-27 (Apr-Jun), but achieved that level in the June quarter itself, the management said at a post-earnings analyst call Tuesday. 

 

"... we are seeing that July has been better till now and it is likely to be better," the management said. "We are expecting to improve credit cost from here further, and that means we are considering all kinds of problems in that. Net credit cost has come down, cost of funds is down, and income has gone up. But at the same time, the credit cost can improve from here because in the first quarter itself we have delivered 1.5%." 

The NBFC's credit costs in the loan-against-property segment are expected to moderate slightly to 2.0-2.2% in FY27 compared to 2.1-2.3% in FY26, the company said in its investor presentation. "Though there could be some upside risk to this forecast in case of a weakening in business activity or spurt in inflation, on account of prolonged conflict in West Asia, resulting in a moderation in borrower cashflows," the company said. 

 

The company detailed its June quarter earnings during market hours Tuesday. The company's shares ended 1.8% lower at INR 1,753 on the National Stock Exchange. The Chennai-based lender reported a net profit of INR 16.54 billion, up nearly 46% on year. Cholamandalam Investment reported a rise in its net profit due to a sharp rise in interest income, which significantly outpaced the rise in interest expenses.

 

The company plans to add over 300 branches in FY27. "We expect all branches opened this year to turn profitable by next year-end," the managament said. "Our branches are doing well... our per branch AUM has been now 12 to 15 crores rupees (INR 120 million to 150 million), which is going up continuously." 

 

Branches which are planned to be opened this year are also expected to deliver INR 120 million to 150 million AUM within the first year itself. In vehicle finance, the company operates more than 100 resident locations. Once they reach scale, the company plans to convert new branches into full-fledged branches and the company will follow a similar approach in affordable housing and loan against property as well, with at least 100 new branches being added annually. Currently, the company has 2,452 resident location networks and branches.

 

In the loan against property segment, the lender said it continues to gain market share through strategic expansion in smaller towns and rural markets, while maintaining a strong presence in tier-1 and tier-2 cities to drive scale and optimise margins. "Growth remains underpinned by consistent disbursement trends and prudent risk management, reinforced by strong collections, efficient legal interventions, and healthy early-bucket performance," the company said in the presentation. The company disbursed loans against property worth INR 47.80 billion in the June quarter, up 23% on year, and the assets under management in the business rose 23% on year to INR 541.30 billion at the end of June. 

 

The management remained confident on disbursements and expects 22% growth in the second half of the financial year, despite some challenges. It is hopeful of sustaining momentum through the rest of FY27. "We are still hoping that we will continue to do well in this financial year... and in terms of disbursement second half is challenging because last year the growth started happening from the second half only. But having said that you know market is still looking very buoyant," the management said. 

 

The lender's aggregate disbursements during the June quarter were INR 296.12 billion with the assets under management rising 23% on year to INR 2.54 trillion as of Jun. 30. The core vehicle finance business remained the largest segment for the diversified lender, with disbursements at INR 165.03 billion in the June quarter.  End

 

Edited by Saji George Titus

 

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