Cholamandalam Investment to borrow Rs 10,000-12,000 crore over next two quarters, says CFO Arul Selvan

Arul Selvan

Cholamandalam Investment and Finance Co. is likely to raise Rs 10,000 crore to Rs 12,000 crore over the next two quarters, Arul Selvan, president and chief financial officer, said in an exclusive interview with Moneycontrol.

“Altogether if I say incrementally, over the next two quarters we should borrow around Rs 10,000 crore-12,000 crore,” Selvan said on November 3.

Selvan said the company’s borrowings will be slightly higher in the second half of this financial year because of lined-up repayments and growth. He said the borrowing mix will remain the same as in the current quarter.

Cholamandalam Investment’s total borrowings increased over 50 percent to Rs 1.2 lakh crore in the July-September quarter from Rs 79,321 crore a year earlier. On a sequential basis, borrowings rose 10.5 percent.

About 49 percent of the borrowings were through bank term loans, followed by securitisation at 16 percent, and debentures at 14 percent. As a percentage of total borrowings, the share of bank term loans was unchanged from the previous quarter, the company said in an investor presentation.

The company, part of the Murugappa Group, increased borrowings through securitisation from 14 percent in Q1 to 15 percent in Q2. The share of debentures reduced from 15 percent in April-June.

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Net income margins

Cholamandalam Investment offers vehicle finance, home loans, loans against property, secured business personal loans and consumer & small enterprise loans.

Selvan said net income margins (NIM) can expand by 10-20 basis points. He said the company is looking to maintain margins in the range of 7.5 percent to 7.6 percent, marginally higher than current levels.

“We expect the margins to be always in the range of around 7.50-7.60 percent,” Selvan said.

In the July-September quarter, the NIM stood at 7.4 percent, as compared to 7.6 percent in the year-ago period and 7.3 percent in the previous quarter.

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Earnings

Chennai-based Cholamandalam Investment reported a 35 percent on-year increase in net profit to Rs 762.49 crore in the three months ended September. Sequentially, the net profit of the non-banking finance company rose just over 5 percent.

Total income grew 51 percent to Rs 3,038 crore, the company said in a statement on November 2.

Aggregate disbursements rose 47 percent to Rs 21,542 crore from Rs 14,623 crore a year earlier.

Assets under management grew 46 percent on-year to Rs 1.34 lakh crore, as against Rs 91,841 crore.

Cholamandalam Investment’s asset quality improved in the July-September quarter. Stage 3 levels reduced to 2.96 percent in September from 3.06 percent at the end of June 2023.

Gross non-performing assets, as per Reserve Bank of India norms, declined to 4.07 percent in September as against 4.30 percent in June. Net NPAs dropped to 2.59 percent against 2.82 percent.

Net NPA is below the threshold of 6 percent set by the RBI for prompt corrective action when certain limits are imposed on banks or NBFCs.