Cholamandalam Q2 net up 27% to Rs120cr on low fund cost

Cholamandalam Investment and Finance today reported a 27 percent jump in net profit at Rs 120 crore in the second quarter ended September 30 on fall in cost of funds, credit losses and better margins. The company had reported a profit after tax of Rs 95 crore in the same period last year. "Our saving cost improved and credit losses also reduced. Margins, too, improved helped by lower cost of funds," company's Chief Financial Officer Arul Selvan said. Net interest margin, an indicator of profitability, improved 20 percent to 8.5 percent from 7.7 percent. The cost of funds declined to 9.6 percent in the quarter under review from 10.08 percent in the same period last year.

The finance firm did an accelerated provisioning to 4 months' overdue and adopted standard asset provisioning at 0.35 percent, 18 months ahead of the RBI's mandate. It disbursed Rs 2,790 crore towards vehicle finance in the July-September period, up 27 percent from Rs 2,189 crore in the same quarter last year. "This was possible on account of strong growth in our heavy commercial vehicle volumes as also healthy growth in used vehicles," Selvan said.

Home equity disbursements grew 7 percent to Rs 770 crore from Rs 717 crore a year ago. The company's aggregate disbursements for the quarter were Rs 3,672 crore as against Rs 3,028 crore. The company raised around Rs 1,000 crore through a mix of bonds and commercial papers in the first half of FY16.

It plans to raise Rs 2,500-2,700 crore through debt in the second half of the fiscal, Selvan said. The capital adequacy ratio (CAR) of the company was at 20.80 percent as against the regulatory requirement of 15 percent.