Cholamandalam Investment and Finance Company (Chola), the financial services arm of Murugappa group said that the company is looking to achieve an asset under management (AUM) growth of 25% to 30% for FY24.
The Chennai-based NBFC is planning to double its new business verticals share in the overall AUM basket in next two to three years. Chola had launched new businesses such as consumer & small enterprise loan, secured business & personal loan and SME loan last year and those verticals currently account for 10% of the AUM.
Arul Selvan, president & CFO, Chola told FE :“We have a well diversified portfolio and they are present across the country. It makes us easy to capitalise on demand both from product and geographies perspective. We could fairly get the disbursements and AUM up in the second quarter of the current fiscal,” he said. For FY23, Chola’s AUM stood at Rs 1,12,782 crore, with total disbursements being at Rs 66,532 crore.
Elaborating on the performance of the company, he said its AUM grew by 46% in Q2FY24 supported by all product verticals, primarily the vehicle finance which rose by around 38%. The company’s loan against property business went up by 42% while home loan business logged an increase of 112%.
“From the disbursement angle, all the verticals have grown and that had contributed to the overall AUM growth. In case of home loans, we have been able to penetrate to different geographies including in the east where we could tap into tier-II and tier-III cities and that has helped us scale up this business. We are now taking positions in Odisha and Bihar, apart from western geographies like Maharashtra and Gujarat,” he said.
On the liability side, Arul Selvan said the company has been able to hold the cost of funds down and was able to increase the net interest margin (NIM) marginally up.
“Yields are improving and cost of funds are stable. Only area we need a little bit of caution is on the opex -which is slightly on the higher side. We are in the process of controlling it and we will get that also around. Otherwise, we seem to be on the track to reach our targets,” he said.
Regarding its new businesses such as consumer & small enterprise loan, secured business & personal loan and SME loan, he said since the base for these product segments in Q2FY23 were low, it might appear that they had grown aggressively in Q2FY24.
“Going forward, in third and fourth quarters, we may see lesser growth in these, because the corresponding quarters last year had comparatively higher base. So, the 40% to 45% disbursement growth in Q2 may mellow down to around 30% level,” he said.
Chola launched in Q2 an QIP issue of equity shares of Rs 2,000 crore and compulsorily convertible debentures (CCDs) of Rs 2,000 crore, overall aggregating to Rs 4,000 crore. “This will take care of our capital adequacy requirement,” he said.
The capital adequacy ratio of the company was at 16.62% as against the regulatory requirement of 15%. While tier-I capital was at 14.66%, tier-II capital stood at 1.96%. Post the capital raise, the capital adequacy ratio is around 20%.