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What the record says.
Cholamandalam reported a strong Q4 FY26 with aggregate disbursements of 32,913 crore, up 25% YoY, and AUM reaching ₹2,46,630 crore (+21% YoY). Vehicle finance disbursements grew 36% YoY, while MSME and consumer segments posted 11% and 45% growth respectively. NIMs improved 40 bps YoY, and pre-overlay ROA stood at 4.1% (vs 3.6% last year). Management guided for FY27 AUM growth of 20-23%, net credit cost improving to 1.5% (from 1.6%), and pre-tax ROA of 3.5%. A precautionary management overlay of ₹200 crore was taken against global uncertainties. Key risks include potential second-order effects from crude price volatility and supply disruptions, though management sees no deterioration in ground-level demand or asset quality as of April.
Colored figures show movement against the previous available record.
Guidance to track
- Management expects overall AUM growth to remain in the 20-23% range, with vehicle finance growing ~18% and mortgage (HL+LAP) at 25-30%.
- Net credit cost (pre-overlay) is guided to decline from 1.6% in FY26 to 1.5% in FY27, driven by better underwriting and improving asset quality.
- Management targets a pre-tax ROA of 3.5% for FY27, up from ~3.3% in FY26 (post-overlay), supported by lower credit costs and stable NIMs.
- Planned branch additions include 100 vehicle finance, 100 home loan, 100 LAP, and 300 exclusive gold loan branches to drive growth.
Risks flagged
- Management highlighted risks from crude price spikes and LPG supply shortfalls, which could impact transport operators and credit costs. A ₹200 crore overlay was created as a precaution.
- Analysts raised concerns about the impact of geopolitical tensions on CV demand. Management stated no deterioration seen in April data, but acknowledged uncertainty.
- Management noted that growing high-yield segments like CEL and consumer durable inherently carry higher credit costs, which could offset improvements in vehicle finance.
- Home loan disbursements were impacted by election-related administrative slowdowns and land record digitization issues, which could persist in some markets.
Key quotes
- We are still holding our growth trajectory between 20 to 23% what we have been committing and we are still hoping that our net credit cost will go down from 1.6% pre-overlay to 1.5% and our ROA should improve then closer to 3.5% pre-tax ROA.
- Last year when we started we were having three engines of Chola – LAP, SBPL and HL – they were driving the growth. Now all eight engines are driving, so that is what is our comfort level.
- We have not seen any impact of the war. For last three years we have been going through the problem either from the geography point of view or the product point of view... from Q4 onwards it started improving.
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