Cholamandalam Investment spurts after Q2 PAT jumps 41%

Cholamandalam Investment and Finance Company surged 8.12% to Rs 270.40 after the companys standalone net profit jumped 40.7% to Rs 431.91 crore in Q2 FY21 from Rs 306.97 crore in Q2 FY20.

Oct 30, 2020 03:10 IST capital market

Total income during the quarter rose 11.1% year-on-year (YoY) to Rs 2439.78 crore. Provisions and write-offs jumped 233.7% to Rs 317.60 crore in Q2 September 2020 from Rs 95.17 crore in Q2 September 2019.

Profit before tax in Q2 FY21 stood at Rs 581.97 crore, up by 11.2% from Rs 523.30 crore in Q2 FY20. Current tax expense in the second quarter increased by 69.8% YoY to Rs 173.74 crore.

Aggregate disbursements in Q2 FY21 were at Rs 6,457 crore as against Rs 7,381 crore in Q2 FY20, a decline of 13%.

As of 30 September 2020, assets under management grew by 16% at Rs 74,471 crore as compared to Rs 64,409 crore as of 30 September 2019.

Cholamandalam Investment and Finance said that pursuant to the moratorium getting over in Aug 2020, the company had over 95% of the moratorium customers starting to repay their installments till date. However, considering the externalities in the market, on a prudent basis the company has created additional provisions of Rs 250 crore towards macro provisions during this quarter in Stage 1 and 2. Including this, the cumulative additional provisions towards macros stand at Rs 800 crore. The total provisions, including the additional macro provisions and the normal provisions created basis the prevailing ECL model is at Rs 1688 crore, which is at 2.64% of the overall book.

The company continues to hold strong liquidity position with Rs 6,802 crore as cash balance as of September 2020, with a total liquidity position of Rs 9,797 crore (including undrawn sanctioned lines). The Asset and liability management (ALM) is comfortable with no negative cumulative mismatches across all time buckets.

The Capital Adequacy Ratio (CAR) of the company as on 30th September 2020, was at 19.51% as against the regulatory requirement of 15%.

Commenting on the results, Arun Alagappan, managing director, stated The quarter gone by was critical not just for us, but for the entire banking and financial services industry. With the 6-month moratorium ending in August20, the focus was to scale up on-field collection efforts and the company has been able to make considerable improvement in the last 2 months.

While the broader economy is still recovering, the company has witnessed a better than expected disbursement numbers in Q2 FY21, with the trend seeming to be on a positive trajectory in the coming quarters. The pent-up demand and the economic activities associated with the festive season are expected to boost business sentiments and improve disbursements and collections across the businesses.

Looking ahead, while business as usual post COVID-19 is still sometime away, the past couple of months have given us enough reasons to be cautiously optimistic about H2 FY21.

Cholamandalam Investment and Finance Company is a diversified non-banking finance company engaged in providing vehicle finance, home loans and corporate mortgage loans, small and medium enterprises (SME) loans, investment advisory services, stock broking and a range of other financial services.

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