Cholamandalam Investment & Finance Company Ltd Management Discussions

MACROECONOMIC OVERVIEW

FY 2025-26 began on a positive note for the Indian economy, supported by strong domestic fundamentals and continuity in economic policy. Moderating inflation, a normal monsoon and resilient consumption contributed to a stable macroeconomic environment during the early and mid-part of the year. The Governments continued emphasis on fiscal discipline, coupled with sustained public infrastructure investment, fostered confidence across sectors, while private consumption and services activity remained robust. Collectively, these factors underpinned broad- based economic momentum and financial stability during the first three quarters of the fiscal year.

Reflecting this strength, the Government of India continued its commitment to fiscal consolidation, targeting a fiscal deficit of 4.4% of GDP for FY 2025-26, while sustaining growth-oriented capital expenditure. Supported by healthy domestic demand and proactive policy measures, India remained among the fastest growing major economies globally, with full year GDP growth estimated in the range of 6.8%-7.0%.

Macroeconomic conditions, however, became more challenging in the latter part of the year as global uncertainties intensified. The escalation of geopolitical tensions in March 2026 led to sharp volatility in global energy markets and disruptions across critical supply chains. The resultant increase in crude oil and fuel prices introduced renewed inflationary pressures and heightened external risks, moderating the otherwise favourable domestic economic momentum.

Despite these global headwinds, Indias robust foreign exchange reserves, resilient domestic demand and proactive policy management provided important buffers, enabling the economy and financial system to navigate this period of heightened uncertainty with relative stability.

Inflation and monetary conditions during FY 2025-26 reflected contrasting trends across the fiscal. During the first three quarters, CPI inflation moderated significantly to an average of 3.7%, aided by a normal monsoon, strong agricultural output and effective supply side interventions. This benign inflationary environment enabled the Reserve Bank of India (RBI) to adopt a growth supportive monetary stance. Accordingly, the RBI cumulatively reduced the policy repo rate to 5.25% by December 2025 to support economic activity.

In the final quarter, however, inflation dynamics shifted following the geopolitical escalation. Global crude oil prices rose by 10-13% over a short period, accompanied by sharp increases in diesel and aviation fuel prices, raising concerns around imported inflation and

currency pressures. In response, the RBI adopted a more watchful and data dependent stance, with liquidity management remaining a key focus. The Monetary Policy Committee (MPC) thereafter maintained a largely neutral stance to ensure effective transmission of earlier rate actions while remaining responsive to evolving macro financial risks.

For the NBFC sector, FY 2025-26 reinforced the importance of disciplined growth, prudent risk management and balance sheet resilience amidst fluctuating liquidity conditions and evolving credit risks. Maintaining high underwriting standards, diversified funding sources and calibrated asset liability management remained critical, alongside the continued responsibility of supporting credit flow to priority segments of the real economy.

Against this backdrop, the Company remained focused on protecting stakeholder interests through prudent capital allocation, strong governance practices and a long term approach to sustainable growth. These fundamentals are expected to position the Company well to manage near term uncertainties while continuing to create long term value for shareholders.

INDUSTRY GROWTH PROSPECTS

Automobile Industry

The Indian automobile industry sustained its growth momentum in FY 2025-26, supported by a combination of cyclical recovery and structural tailwinds. The Commercial Vehicle (CV) segment emerged as a key growth driver, registering a robust 13% expansion and achieving peak volumes, reflecting strong underlying economic activity.

Segment-wise, growth remained broad-based. Heavy Commercial Vehicles (HCVs) and Light Commercial Vehicles (LCVs) grew by 10% and 17%, respectively, driven by an infrastructure push, rising industrial activity, and e-commerce-led logistics demand. Growth in Small Commercial Vehicles (SCVs), however remained comparatively subdued at 6%, indicating a gradual recovery following a two-year downturn.

The upcycle was supported by multiple structural and policy-led factors, including GST efficiencies, sustained government capital expenditure, the vehicle scrappage policy, and increased activity in the mining and construction sectors. Additionally, the industry is witnessing an early but steady transition towards alternative powertrains, particularly electric vehicles (EVs) and last-mile delivery segments.

Looking ahead to FY 2026-27, the CV segment is expected to enter a normalization phase, with growth moderating to 4-6%, largely due to a high base effect. However, medium-term fundamentals remain strong, underpinned by continued infrastructure investments,

rising freight demand, improving fleet utilization, and a regulatory push towards fleet modernization and emission compliance.

The Passenger Vehicle (PV) segment continued its structural growth trajectory, expanding by 8% in FY 2025-26 and recording its fourth consecutive year of peak sales. This growth reflects evolving consumer preferences, including increasing urbanisation, rising disposable incomes, and a marked shift towards SUVs and higher- end variants. Export opportunities and increasing localization levels are also contributing to long-term resilience.

PV growth is expected to moderate to 4-6% in FY 2026-27, signalling demand stabilization after a strong multi-year growth phase. Key growth drivers include rural recovery, new model launches, and continued premiumisation. However, the segment remains exposed to risks such as global supply chain disruptions, semiconductor availability constraints, commodity price volatility, and geopolitical uncertainties.

The two-wheeler segment recorded strong growth of 11% in FY 2025-26, driven by rural demand recovery, improved access to financing, and affordability enhancements. Demand from Tier 3 and Tier 4 markets, along with increasing participation by women riders, has structurally expanded the consumer base.

Going forward, growth is expected to moderate to 3-5% in FY 2026-27, reflecting a transition from cyclical rebound to steady- state demand. EV is expected to be a key disruptor, particularly in the entry-level and commuter segments, supported by government incentives, lower operating costs, and increasing product availability. However, price sensitivity in this segment remains a critical factor.

The geo-political conflict has led to an increase in crude oil prices, resulting in higher fuel costs and creating near-term headwinds for the vehicle finance industry. We expect a moderation in vehicle loan growth, particularly in commercial vehicles along with a potential cash flow disruptions among small transport operators if elevated fuel prices persist. While the long-term growth remains intact, nearterm geopolitical and fuel-price uncertainties may create short term disruptions. The vehicle finance division remains well positioned, supported by a diversified mix of products across geographies, strong collection infrastructure, and robust underwriting models.

Construction Equipment Industry

The Construction Equipment (CE) industry experienced a contraction of 8% in FY 2025-26, primarily due to the elevated base of the previous year and a temporary slowdown in project execution during certain periods.

Despite this short-term correction, the medium-term outlook remains positive, driven by the governments sustained focus on infrastructure development across roads, railways, urban infrastructure, and mining. The Union Budgets capital expenditure allocation of Rs. 12 lakh crore provides strong demand visibility for the sector.

Growth in FY 2026-27 is expected to be moderate yet stable, supported by a healthy project pipeline and increased mechanization. Additionally, rising adoption of technologically

advanced and fuel-efficient equipment, along with digitization and telematics integration, is expected to improve operational efficiency and lifecycle management.

However, execution risks, land acquisition challenges, regulatory clearances, and input cost fluctuations remain key monitorable for the sector.

Tractor Industry

The tractor industry recorded exceptional growth of 23% in FY 2025-26, achieving peak sales levels on the back of favourable monsoon conditions, strong rural liquidity, and higher agricultural output.

The outlook for FY 2026-27 indicates a likely sharp moderation primarily due to the high base effect and the implementation of stricter emission norms, which could increase acquisition costs and temporarily impact demand.

Over the medium term, the sectors performance will remain closely linked to monsoon variability, crop realizations, minimum support prices (MSP), and government subsidies.

Loan Against Property

The NBFC Loan Against Property (LAP) portfolio is expected to moderately grow by 19-21% in FY 2026-27, driven by rising property ownership, sustained demand from MSMEs, increasing reliance on secured credit for business expansion, and steady sourcing from non-metro and self-employed segments. However, the ongoing geopolitical tensions in West Asia present incremental downside risks through elevated inflation, supply chain disruptions and moderation in economic activity, which could impact borrower cash flows and asset quality, particularly within MSME-linked segments. While the secured nature of LAP provides relative resilience, portfolio performance and growth momentum remain sensitive to evolving macroeconomic conditions and interest rate trajectory.

(Source: https://www.icra.in/Research/ResearchDetails/2)

NBFCs continue to benefit from customized underwriting frameworks and faster turnaround times, supported by a deep understanding of local property markets, particularly in underserved segments. Retail-ticket LAP loans remain the primary driver of market expansion, with a strong emphasis on asset quality. Ongoing digitization across application processing, documentation, credit assessment, and portfolio monitoring has further enhanced scalability and efficiency while maintaining underwriting discipline.

Housing Finance (Home loans)

The housing finance services industry is expected to report a double-digit growth in revenues on the back of continued healthy demand for housing, particularly affordable housing. The housing finance services industry is likely to grow at a healthy pace on the back of a revival in demand for affordable housing and an increase in demand for mid-segment and premium-segment housing.

Analysts expect the portfolio of Affordable Housing Finance Companies (AHFCs) to grow by 19-21% in FY 2026-27. Delinquencies remained stable in FY 2025-26 after a marginal

uptick in Q1 FY 2025-26 due to portfolio seasoning for entities that sourced significant portfolios in recent years.

The West Asia conflict could potentially lead to disruptions causing an adverse increase in input costs for construction, softening demand, and tightening cash flows — which could lead to customer income and repayment deterioration.

Small and Medium Enterprises (SME)

MSMEs are the backbone of Indias economic landscape, pivotal in employment generation, entrepreneurship promotion, and economic development. Through resilience, innovation, and adaptability, MSMEs have consistently driven the nations growth, providing employment to millions and fostering inclusive development. As India strives to position itself as a global economic powerhouse, the MSME sector undoubtedly plays a central role, fostering innovation, generating employment, and enhancing export competitiveness.

The MSME sector continues to be a cornerstone of Indias economic growth, contributing significantly to employment, manufacturing, and exports. In recent years, the sector has displayed remarkable resilience, with its share in the countrys Gross Value Added (GVA) in Indias GDP increasing from 29.6% in 2021-22 to 30.1% in 2022-23 &

2023- 24, highlighting its growing role in national economic output.

Micro, Small and Medium Enterprises (MSME) sector, with more than 7.16 crore enterprises registered on Udyam Registration Portal and Udyam Assist platform, employing 31.33 crores workforce has emerged as a highly vibrant and dynamic sector of the Indian economy contributing around 30% of Indias GDP, and 45% of Indias exports. It contributes significantly to the economy and social development of the country by fostering entrepreneurship and generating large employment opportunities at comparatively lower capital cost. This sector contributes significantly to inclusive industrial development of the country.

MSME exports have witnessed a remarkable rise, increasing from Rs.3.95 lakh crore in 2020-21 to Rs.12.39 lakh crore in 2024-25, underscoring their critical role in boosting Indias economy and strengthening global trade. The total number of exporting MSMEs in 2024-25 has also increased considerably from 52,849 in 2020-21 to 1,73,350 in 2024-25. MSMEs demonstrated an exemplary growth trajectory, in Indias external trade, with their contribution to total exports increasing from around 45.7% in 2023-24 to 48.55% in

2024- 25, and further estimated at ~48.6% in 2025-26, underscoring their expanding role in driving Indias trade performance and global competitiveness.

The formalization of the MSME sector particularly within the micro and small enterprises segment has gained a significant impetus through the increasing adoption of Udyam Registration and Udyam Assist Portal. Over 7.16 crore MSMEs have been registered by Nov 2025 as compared to 2.5 crore as of March 2024. Higher levels of registrations are expected to not only help in providing better credit access but also enhance the effectiveness and reach of the various government policy measures in the sector.

Impact of West Asia war in MSME industry

The ongoing West Asia conflict has severely impacted Indian Micro, Small, and Medium Enterprises (MSMEs) by triggering global supply shocks, surging commodity and crude prices, and increasing compliance burdens for exporters. It is emerging as a multi dimensional stress factor for the MSME sector. The impact is visible across cost inflation, export disruption, liquidity pressure, and demand slowdown, with early signals of credit stress.

The ongoing conflict has triggered cash flow stress across MSMEs, with firms increasingly borrowing just to sustain operations rather than expand. Payments are delayed, shipments rerouted, and working capital cycles have lengthened significantly. Reports indicate that geopolitical tensions may weaken the repayment capacity due to higher input costs and demand slowdown. MSMEs are facing 15-25% increase in operating costs due to fuel, freight, and raw material price spikes linked to the conflict.

Personal Loans

Personal loans—constituting ~11% of NBFC AUM—had sharply moderated from 37% growth in FY 2023-24 to 18% in FY 2024-25, driven by regulatory tightening and lender recalibration. However, CRISIL now expects personal loan growth to improve to ~22-25% across FY 2025-26 and FY 2026-27, supported by better performance of recent originations and more calibrated risk selection. This suggests that while the breakneck expansion of earlier years is unlikely to return, personal loan growth is expected to regain momentum in FY 2026-27, significantly higher than the 15-16% moderation projected earlier.

Portfolio Performance and Delinquencies: The ongoing conflict in West Asia has led to an increase in fuel prices, which is reducing the disposable income of retail borrowers. This is also expected to moderate consumption, as households adjust their spending patterns in response to rising costs.

If the conflict persists over a prolonged period in FY 2026-27, it could adversely impact personal loan growth due to price pressures, supply chain disruptions, and potential job losses.

AUM Share of Personal Loans:

With personal loans constituting ~11% of NBFC AUM, a recovery to 22-25% growth ensures that the segment continues to be a meaningful contributor to overall NBFC AUM expansion.

Given that NBFC AUM is expected to grow at 18-19% annually and cross Rs.50 lakh crore by March 2027, the personal loan segment is expected to remain one of the stronger retail growth engines.

Unsecured Business Loans:

Consumer Durables (CD)

According to industry reports by India Brand Equity Foundation (IBEF), Indias consumer electronics and appliances sector is witnessing strong structural growth and is expected to emerge as one of the largest markets globally. By FY 2026-27, India is projected to become the fourth-largest consumer durables market in the world, with the sector growing at an estimated ~11% CAGR, driven by rising disposable incomes, urbanisation, increasing household penetration, and a shift toward smart, energy-efficient,

and premium appliances. The market size is expected to reach ~Rs.3 lakh crore by FY 2028-29, supported by favourable demographics and technology-led consumption trends.

The industry posted double-digit growth through FY 2025-26, with strong demand for premium, feature-rich, and connected products, including large-screen televisions, AI-enabled laptops, and smart appliances. Premiumisation is increasingly visible across categories, reflecting rising aspirational consumption across urban as well as Tier II and Tier III markets.

On the supply side, government initiatives such as the Production Linked Incentive (PLI) scheme for electronics and white goods have strengthened domestic manufacturing and localisation. The PLI programme has attracted investments exceeding Rs.1.7 lakh crore and has created more than 1.2 million jobs, significantly boosted electronics production and strengthening Indias manufacturing ecosystem.

The growth of the consumer durables sector is also closely linked to the availability of consumer financing, which plays a critical role in improving affordability and accelerating purchases. Industry estimates suggest that nearly 35-40% of consumer durable sales are financed, supported by innovations such as no-cost or low- cost EMIs, longer-tenure loans, zero down-payment options, digital onboarding, and paperless processing.

As per the latest CRIF report, the consumer durable (CD) loan portfolio outstanding has expanded to Rs.96,000 crore, registering ~14% YoY growth, with a ~7% sequential rise during the festive quarter. This indicates a recovery in originations, supported by seasonal demand and continued adoption of consumer financing. Portfolio quality metrics have remained largely stable, with marginal improvements in delinquency indicators across most lender categories.

Looking ahead, in the long term, the CD finance segment is expected to maintain strong structural momentum, supported by rising credit penetration, growth of organised retail and e-commerce channels, and increasing adoption of digital and embedded finance models at the point of sale. Industry estimates continue to project the consumer durable finance market to grow at ~20-22% CAGR over the period 2024-2029, driven by rising consumption in Tier II and Tier III markets and the wider availability of instant credit solutions.

However, in the near term, geopolitical developments—particularly the West Asia conflict—have introduced downside risks to demand. The conflict has disrupted global supply chains and led to a sharp increase in crude oil and freight costs, along with shortages in key inputs such as petrochemicals and semiconductors. At the same time, rupee depreciation has further inflated the landed cost of imported components.

As a result, manufacturers across consumer durables and mobile segments have been compelled to pass on cost increases through price hikes, leading to higher ticket sizes for end consumers. This, combined with inflationary pressures on household budgets, has started to moderate discretionary spending, particularly in price- sensitive segments.

Consequently, while the long-term growth trajectory of CD finance remains intact, the near-term environment is likely to see:

• Softening in volume growth, especially in mass and entry- level categories

• Increased reliance on financing to sustain demand, partly offsetting the affordability impact

• Margin pressures across OEMs, with NBFCs seeing relatively better resilience due to penetration gains

In essence, the sector is entering a phase where structural drivers (credit access, distribution expansion) remain strong, but cyclical headwinds (inflation, pricing pressure, geopolitical uncertainty) may temporarily moderate growth momentum.

Secured Business and Personal Loan (SBPL)

Indias lending landscape continues to exhibit a structural credit gap, with a large segment of borrowers remaining underserved despite having both collateral and repayment capacity. This segment— distinct from traditional Loan Against Property (LAP) customers—is often excluded from formal credit due to rigid underwriting norms, limited documentation, and non-standard income profiles.

The challenge is more pronounced in rural and semi-urban regions, where access to formal banking remains limited. Despite improvements in financial inclusion, barriers such as low financial literacy, informal income streams, and high servicing costs persist. As a result, many households continue to rely on informal credit sources, including moneylenders, highlighting a significant unmet demand.

SBPL addresses this gap by offering collateral-backed business and personal loans tailored to this underserved segment. Its approach combines cash flow-based credit assessment with prudent loan- to-value (LTV) ratios, enabling access to smaller ticket-size loans aligned with customer needs. By leveraging property as collateral while evaluating repayment capacity beyond traditional metrics, SBPL expands formal credit access in underpenetrated markets while maintaining a disciplined risk framework.

Geopolitical conflicts primarily impacts Indias self-employed, non-professional segment in Tier 3-8 markets through an oil- driven inflation shock that compresses both incomes and cash flows. Rising crude prices transmit into higher fuel, transport, and input costs, which in turn push up food inflation and reduce real household incomes, forcing customers to cut discretionary spending. For micro-entrepreneurs and informal workers, this results in a dual squeeze—declining business revenues alongside rising operating costs—leading to margin compression, working capital stress, and higher reliance on short-term borrowing. Since this segment lacks stable income buffers, even small cost shocks translate quickly into repayment stress, increasing credit risk while simultaneously driving higher demand for formal credit as reliance on expensive informal sources becomes unsustainable. Overall, the impact is characterised by weaker consumption, volatile cash flows, and elevated credit demand, making it both a risk and an opportunity for lenders like Chola.

Gold Loan

The gold loan industry has emerged as one of the fastest- growing retail credit categories over the past year. The portfolio stood at approximately Rs. 16 lakh crore as of December 2025, growing by over 40% year-on-year. This rapid expansion has been strongly supported by an rally in gold prices. According to India Bullion and Jewellers Association (IBJA) rates, domestic 24-karat gold prices surged from approximately Rs. 64,000 per 10 grams in early 2024 to over Rs.1.5 lakh per 10 grams in 2026. This near-doubling of gold prices over a two-year period has significantly enhanced collateral values, enabling borrowers to access higher loan amounts against the same quantity of gold and making gold-backed credit an increasingly attractive alternative to unsecured lending products.

In recent months, gold prices have witnessed short-term volatility owing to heightened geopolitical tensions, which triggered sharp two-way movements as safe-haven demand and oil-driven inflation fears pulled prices in opposite directions. While such corrections have not historically deterred the long-term growth trajectory of gold. Gold prices have consistently delivered over 10% CAGR, the current environment carries a greater degree of near-term uncertainty. Should this volatility persist, elevated LTVs will leave thinner buffers to absorb sharp price corrections.

The growing scale of the gold loan market has attracted increased regulatory attention, signalling a systemic shift in what was traditionally an unorganised sector. The comprehensive measures outlined in the Master Directions are expected to create a more sustainable foundation for long-term growth, while validating the industrys scale and importance within Indias broader financial ecosystem.

Despite its significant growth, the gold loan industry remains materially underpenetrated. India holds an estimated 25,00035,000 tonnes of gold across households and temples, valued at approximately US$4 trillion. Yet, only a small fraction of this vast gold reserve has been monetised through organised lending, positioning the industry for disproportionate growth in the coming years.

Source: CRIF High Mark, World Gold Council

BUSINESS ANALYSIS VEHICLE FINANCE (VF)

Disbursements during the year stood at Rs. 62,123 crores, as against Rs.53,922 crores in the previous year, registering a robust growth of 15%. This growth was primarily driven by strong momentum across key segments, new commercial vehicles recorded a 20% year-on-year increase, the new passenger vehicle segment grew by 15%, while the two-wheeler segment witnessed a significant surge of 34%, reflecting improving demand dynamics and market recovery. Assets Under Management (AUM) expanded by 18% to Rs. 1,19,558 crores in FY 2025-26, compared to Rs. 1,01,257 crores in FY 2024-25, underpinned by sustained disbursement growth and product portfolio expansion. Profit Before Tax (PBT) for the year stood at Rs. 3,145 crores, as against Rs. 2,824 crores in the previous year, reflecting a healthy growth of 11%, supported by improved

business volumes and operational efficiencies. Stage 3 assets stood at 3.84% in FY 2025-26 compared to 3.52% in FY 2024-25. The marginal movement was primarily attributable to subdued cash flows in certain segments, reflecting continued stress in select pockets of the market.

The Vehicle Finance (VF) business will continue to maintain a calibrated mix of new and used vehicle financing, with a focus on sustaining higher yields and margins. Given its predominantly fixed-rate lending model, the stabilisation of interest rates is expected to support an expansion in net interest margins (NIMs), thereby strengthening overall profitability.

The VF division continues to invest in strengthening its credit architecture through data-driven underwriting frameworks incorporating no-touch/ low-touch swim lanes, leveraging alternate data sources and analytics led decisioning. This enhanced credit ecosystem is aimed at improving risk segmentation, enabling sharper credit filters at micro-market levels, and reducing delinquencies while improving overall portfolio quality.

Deep penetration in semi-urban and rural markets remains a key differentiator. Sustained expansion across Tier 3, Tier 4, and Tier 5 geographies is expected to further diversify portfolio risk, reduce geographic concentration, and enhance last-mile reach for both sourcing and collections. This extensive distribution network, supported by localized expertise, positions the VF division to effectively capture incremental growth opportunities in underpenetrated markets.

Tech-powered centralized lead generation, score based pre-approved loan offers for wallet deepening, hyper-personalized marketing campaigns along with conversational D2C loans are expected to enhance engagement with the existing customer base driving repeat and cross-sell opportunities aimed at strengthening customer lifetime value.

Technology will remain a core enabler, with increased adoption of digital tools and GenAI-led solutions across the value chain including underwriting, customer engagement, and collections. Personalized, data-driven collection strategies are expected to enhance recovery efficiencies and optimize operating costs, further strengthening the resilience and scalability of the VF business.

LOAN AGAINST PROPERTY (LAP)

LAP business delivered a strong performance in FY 2025-26, with disbursements rising to Rs. 20,459 crore, reflecting 14% growth over FY 2024-25 and a five-year CAGR of 41% (FY 2020-21 to FY 2025-26). Assets Under Management (AUM) increased by 26% on Y-o-Y basis to Rs. 52,295 crores in FY 2025-26 up from Rs.41,439 crores in FY 2024-25, translating into a CAGR of 29% over FY 2020-21 to FY 2025-26.

Growth was driven by strategic expansion into non-metro markets, supported by distribution scale-up, a diversified channel ecosystem, and a continued focus on retail ticket LAP. The business has also initiated deployment of AI-enabled tools to enhance underwriting processes and KYC verification, improving efficiency. LAP continues to remain a key contributor to MSME growth in India by supporting business expansion and working capital needs, with 97% of

FY 2025-26 disbursements directed towards the Self-Employed Non-Professional (SENP) segment, reinforcing the Companys focus on underserved borrower segments.

The business operates through 814 branches across 26 states and union territories, serving over 87,077 customers; notably, 76% of branches are in rural areas, contributing Rs. 7,094 crore in disbursements, or 35% of total LAP disbursements, underscoring the effectiveness of a branch-led distribution model. The portfolio has achieved greater diversification across customer segments and geographies, reducing concentration risks and enhancing overall stability, with over 75% of exposures backed by residential properties and an average ticket size of approximately Rs. 52 lakh. Asset quality remained stronger than industry averages, supported by sustained improvements in collection efficiency, effective Gross Stage 3 rollbacks, and focused collection initiatives.

During FY 2025-26, the business further strengthened its focus on early-bucket delinquency management through pre-delinquency interventions, early risk identification, analytics-driven prioritisation frameworks, and enhanced digital collections, resulting in a significant improvement in customer reach and engagement.

HOME LOANS (HL)

As of 31 March, 2026, the HL business reported over 1.68 lakh live accounts (20% growth YoY) with an AUM of Rs. 22,688 crores (23% growth YoY). The portfolio is from Tier II, III, IV cities and towns. The disbursements for FY 2025-26 stands at Rs. 7,363 crores. The target group remains the lower middle income group customer. The average ticket size stood at 18.5 lakhs with an average LTV of 49.5%. Approximately 88% of the portfolio comprises business owners with semi-formal income and significant business vintage while 17% of customers are first time borrowers.

The HL business leverages Cholas strengths in reaching out and underwriting lower and middle-income borrowers across the country, extending its presence to even the smallest villages and towns through prudent underwriting, careful risk segmentation and a balanced portfolio mix. Chola offers loans for self-construction, purchase of new flats/independent houses, purchase of pre-owned flats/independent houses, balance transfer from other financiers, mortgage of existing houses for business use and shop loans and also facilitates purchase of plot.

Chola has established a strong presence across Tier II, III, IV towns and cities. The business continues to strengthen its channel partner network to expand customer reach. Home Loans now has pan-India presence positioning it well to benefit from steady demand for affordable housing with a continued focus on first time homebuyers in semi-urban and rural areas. The branch network has also been further expanded across states where the Company is already operational. Home loans are currently serviced through 712 touchpoints across 22 states.

Chola continues to build a strong ecosystem of channel partners, complemented by its digital offerings for customer service and on boarding, positioning it as a trusted choice for customers pan-India.

CONSUMER & SMALL ENTERPRISE LOAN (CSEL)

The Consumer and Small Enterprise Loans (CSEL) division witnessed a strong resurgence in FY 2025-26. Despite challenges in the MSME sector, the division implemented multiple technological and analytical interventions achieving a disbursement of Rs. 7,137 crores with AUM growing by 13% YOY to Rs. 12,362 crores. With a live customer base of over 1.8+ lakh customers and presence across 500+ locations, the division delivered a PBT of Rs. 147 crores.

Key Differentiators & Technology

• Significant business loan disbursements supporting the growth of MSME segment

• Transparent end to end digital process

• Strong data driven underwriting model and risk management capabilities powered by technology and analytics

• Seamless paperless customer journey with quick turnaround times

• Flexible repayment options enabled through flexi loan structures

• Presence across 500+ locations covering 25 states and 4 union territories with a continued focus on financial inclusion

CONSUMER DURABLES LOAN (CD)

Chola entered the Consumer Durables Lending space in FY 2023-24 through a strategic tie-up with Samsung to provide financing to consumers for purchase of Samsung mobile phones. In FY 2024-25, the business expanded into open market consumer durables financing by partnering directly with other OEMs/brands. In FY 2025-26, the combined disbursements crossed Rs. 2,174 crores and also helped in acquiring more than 8.3 lakh customers.

FY 2025-26 was a year of strong expansion for Consumer Durables Lending business, with disbursement growth of 50% from last FY. This growth was supported by the addition of several leading brands—Vivo, Oppo, Realme, Xiaomi, Haier, Whirlpool, Havells-Lloyd, Tecno, Infinix, TCL, IFB, and Amstrad—significantly strengthening the product and dealer ecosystem. The brand network will be further expanded in FY 2026-27.

FY 2025-26 also marked an important milestone in strengthening Cholas in-house digital and sourcing capabilities. The CholaKaart in-house LOS platform was successfully launched, providing a streamlined, internally owned sourcing engine.

FY 2025-26 also witnessed significant digital-process enhancements aimed at improving efficiency, speed, and portfolio quality. These digital capabilities are expected to be leveraged more extensively in FY 2026-27 to drive higher operating efficiency, sharper monitoring, and more scalable execution across SF+ and CholaKaart platforms.

DIRECT TO CUSTOMER (D2C)

Chola launched its Direct-to-Customer (D2C) channel, enabling seamless loan disbursals directly to both existing and new customers without reliance on intermediaries such as Direct Selling

Agent (DSA). The initiative began in Q4 FY 2022-23 through the Chola One app, initially offering personal loans to employees.

By H2 FY 2023-24, the D2C business sharpened its focus towards a pre-approved, fully digital loan journey designed specifically for Cholas captive customer base—including Vehicle Finance, and Consumer Durable customers. The Chola One app was further enhanced to support this targeted, automated lending experience, ensuring faster approvals, improved customer engagement, and a more scalable digital loan origination model. In FY 2025-26, the D2C channel further strengthened its presence by leveraging the Consumer Durables customer base, significantly expanding its reach and deepening engagement across Cholas retail franchise.

Moving into FY 2026-27, the D2C vertical is poised for broader scale, with plans to extend its coverage beyond captive segments while simultaneously enhancing the value proposition for maturing its customer base through differentiated offerings and more advanced digital journey.

SMALL AND MEDIUM ENTERPRISES LOAN (SME)

SME business disbursements during the year were at Rs. 7,312 crores in FY 2025-26. AUM grew by 41% to Rs. 9,338 crores in FY 2025-26 as compared to Rs. 6,628 crores in FY 2024-25. PBT during the year was at Rs. 165 crores as against Rs. 111 crores during last year with growth of 49%.

The SME business has expanded its footprint across the country covering 22 regions with over 120 branches serving approximately 12,200 MSME customers. The business has established strategic partnerships with more than 40 OEMs across key segments such as Industrial equipment, Gensets, Medical Equipment and Solar finance to drive greater financial inclusion in the market.

With the continued growth of the Small and Medium Enterprises ecosystem, Cholas SME loans business division offers a comprehensive bouquet of products to meet the requirements of working capital and capex of SMEs. The portfolio includes multiple products like Term loan, Micro Term loan, Equipment finance, Supply chain finance and Leasing. Further, subproducts offered under Equipment finance are industrial equipment finance, Genset finance, medical equipment finance, Working capital finance and Lease rental discounting.

During the financial year, solar funding was launched as the Companys first Green Finance offering to fund aimed at funding commercial and industrial Roof top installations. Under the leasing segment, the business has also commenced corporate car leases, commercial vehicle and Equipment leasing.

SECURED BUSINESS AND PERSONAL LOAN (SBPL)

As of 31 March, 2026, the SBPL business had crossed 89,000+ live accounts with an AUM of Rs.3,500+ crores. The average ticket size is around Rs. 4.49 lakhs with an average tenure of 6 years. SBPL vertical is currently being distributed across 400+ touchpoint locations spanning 11 states.

Key differentiators include a high-touch, on-ground engagement model that brings services directly to customers, a proprietary income assessment framework tailored to informal business profiles, and a seamless digital journey that ensures speed and transparency. The offering is further strengthened by customised solutions designed to meet the needs of first-time borrowers entering the formal credit ecosystem.

GOLD LOANS

As on 31 March, 2026, Chola has built an AUM of Rs. 1,804 crores from over 26,000 customers across ~119 branches in South and East India, with an average AUM of over 15 crores per branch. The average ticket size stands at around Rs. 2 lakh, with a portfolio of over 1,800 kg of gold as underlying security. This has been possible due to its key differentiators in the gold loan industry, combining the Chola culture of robust risk and processes with the energy of a new business:

• 100% paperless customer journey

• 10+ security measures in every branch

• Rigorous appraisal and risk assessment

• Deep micro-market understanding

• Customer experience at the core of our offering

The business plans to deepen its footprint in the coming years.

ASSET LIABILITY MANAGEMENT (ALM)

Indias growth remained strong across FY 2025-26, powered by consumption, rural recovery, government capex, and GST reforms. GDP growth was consistently above 7% through the quarters , and the full-year expectations settled at 7.4%, placing India among the fastest-growing major economies globally.

Inflation fell sharply in the first half of FY 2025-26 due to softer food prices and supportive supply conditions. It firmed up marginally in the latter part of the year but stayed well below RBIs target range, underpinning a stable policy backdrop. The rupee depreciated significantly and approaching historic lows through the year, exerting pressure on the economy.

Liquidity stayed largely in surplus across FY 2025-26. CRR cuts, regulatory eases and strong government cash balances kept liquidity conditions comfortable. The RBI actively managed fluctuations in liquidity and rupee depreciation through heavy monetary operations and forex swaps, ensuring smooth transmission even during brief tight phases.

Interest rates eased steadily through FY 2025-26 as inflation softened and real rates allowed space for monetary adjustment. The RBI front-loaded cuts, bringing the repo to 5.25% with a neutral monetary stance, from 6.25% at the beginning of the FY. However, the long-term yields rose significantly on account of fiscal concerns, tariffs and GST reforms. This was exacerbated in Q4 by the onset of the war in West Asia which resulted in a spike in crude oil prices and critical inputs. The 10-year benchmark crossed the 7% mark in March 2026, up from a level of 6.35%, in spite of a 100 bps cut by the RBI in FY 2025-26.

RESOURCES & TREASURY

During the year, the Company raised funds from banks/ Financial Institutions and from money markets to support the growth of its businesses at competitive interest rates while maintaining a healthy asset liability position. The borrowing profile as on 31 March, 2026, is given below:

BANK BORROWING

In FY 2025-26, the Company mobilised Rs. 47,334 crores (net) of medium- term loans & ECB and Rs. 3,200 crores (net) as working capital / cash credit / short term loan facilities from banks. The Company continued getting strong support for its money market issuances from banks through subscription of Commercial Papers (CPs) and Non-convertible Debentures (NCDs), and for Securitisation through investment in PTCs. The Company continued to enjoy the steadfast support of the lending banks and the strong relationship helped manage the borrowing plan for FY 2025-26.

MARKET BORROWING

During FY 2025-26, the Company raised CPs of Rs. 20,715 crores and repaid Rs. 9,650 crores towards maturities in FY 2025-26. CP outstanding as at the end of the year was Rs. 11,065 crores. Medium and long-term secured NCDs aggregating Rs. 9,602 crores were mobilised at competitive rates through private placements. At the

end of FY 2025-26, total NCD outstanding stood at Rs. 28,228 crores (Rs. 24,454 crores through Private Placements and Rs. 3,774 crores through public issuances).

Compulsorily Convertible Debentures (CCD) aggregating Rs. 1,370 crores (out of the total issuance of Rs. 2,000 crores in FY 2023-24) were converted into equity shares during FY 2025-26. The residual CCDs of Rs. 630 crores outstanding as at the end of FY 2025-26 will get compulsorily converted in FY 2026-27.

The Tier II borrowings raised during the year was Rs. 100 crores of Perpetual debt and Rs. 2,502 crores of Sub Debt. As at the end of FY 2025-26, Tier II borrowings stood at Rs. 13,223 crores.

MOVEMENT IN INTEREST COST

The Company benefited from the easing interest rates in the economy, given its borrowing mix comprising both floating and fixed rate instruments. On the floating rate borrowings, the Company enjoyed significant transmission of the rate cuts in the economy and marginal borrowings were also mobilised at relatively lower rates during the year.

As a percentage of average borrowings, interest cost stood at 7.5% in FY 2025-26 as compared to 8.0% in FY 2024-25.

CAPITAL ADEQUACY RATIO (CAR)

As at the end of FY 2025-26, the capital adequacy ratio stood at 19.21% (Tier I: 14.73% and Tier II: 4.48%).

INVESTMENTS

The Companys investments of Rs. 6,638 crores include investments in G-Sec of Rs. 4,152 crores, investments in treasury bill of Rs. 1,100 crores, investments in GSTRIPS of Rs. 829 crores, investments in subsidiaries, joint ventures and associates of Rs. 557 crores.

FINANCIAL REVIEW

The Companys aggregate disbursements grew by 11% from Rs. 1,00,869 crores in FY 2024-25 to Rs. 1,11,642 crores in FY 2025-26. The business AUM (including on book and assigned net of provisions) in FY 2025-26 grew by 21% and stood at Rs. 2,24,334 crores in FY 2025-26 as against Rs. 1,84,746 crores in FY 2024-25. Profit before tax (PBT) for the year was at Rs. 6,961 crores after the creation of a management overlay provision of Rs. 200 crores towards potential adverse impacts on account of geo-political risks on the loan portfolio of the Company. On a comparable basis, PBT for the year ended March 2026 was at Rs. 7,161 crores before considering management overlay, as against PBT of Rs. 5,737 crores last year, registering a growth of 25%. Comparable PBT-ROTA for FY 2025-26 before management overlay was at 3.4% for the year as against 3.3% in FY 2024-25.

HUMAN RESOURCES (HR)

In FY 2025-26, Cholas HR function took a decisive step forward— from being a process custodian to becoming a business partner. Anchored in the HR 2.0 framework of Right Talent, Right Leadership, Right Capabilities, and Right Workplace, every initiative during the year was guided by a clear focus: its impact on business outcomes and on the people who drive the organisation.

During FY 2025-26, the HR function strengthened its role as an employee champion through structured engagement, early intervention, and responsive support mechanisms.

• Key initiatives included KY HR and Handholding, a first-month connect programme designed to understand post-joining sentiment and support employees in transitioning smoothly from onboarding to performance. The Talent Shield framework further strengthened employee retention by deploying stay interviews, structured pulse checks during the critical initial 90 days, root cause analysis of attrition, and programmes that deepened employee connection with the organisations growth journey.

• To enhance accessibility and accountability, the Employee Care Programme established a dedicated helpline, providing employees with a clear and reliable channel for raising and resolving concerns.

• In support of new business initiatives, HR played a critical role in building the Gold Loan vertical, encompassing talent acquisition, onboarding, and delivery of structured training programmes covering lending systems, gold testing, fraud prevention, and customer engagement—ensuring readiness from day one.

• Further, the Chola Jobs initiative transformed talent acquisition by introducing a QR-code-driven application process, enabling seamless candidate access at scale. The programme also established a dual-track pipeline, certifying candidates both for training and for hiring, thereby creating a scalable and job- ready talent ecosystem.

During FY 2025-26, Chola strengthened its focus on capability building by aligning all learning and development initiatives directly with business outcomes, including productivity enhancement, portfolio quality improvement, and customer retention. Leadership development remained a priority through the Chola Certified People Manager programme, equipping managers with essential capabilities in goal setting, coaching, feedback, and delegation. In parallel, the Chola Certified Performance Catalyst initiative leveraged high-potential employees to mentor and improve the performance of peers, creating a scalable performance improvement model.

The launch of Chola MyCompass, a performance enablement platform, marked a significant step forward in digital learning. With embedded AI support through Buddy AI, the platform enabled learning in the flow of work, achieving an adoption rate of 81% within three months of launch.

Chola reaffirmed its commitment to employee wellbeing through the launch of Soukhyam, a holistic programme built across five pillars—physical, emotional, spiritual, financial, and social wellbeing. The initiative reflects the Companys belief that its people are its greatest strength and aims to support them

comprehensively. As part of this programme, structured wellness touchpoints were implemented throughout the year, including health camps, wellness seminars, and focused interventions addressing both physical and mental wellbeing, thereby fostering a healthier and more engaged workforce.

TECHNOLOGY INITIATIVES

Digital at the Core - Continuing the Journey

Advancements in the areas of GenAI and Digital Public Infrastructure in India coupled with an expanding data ecosystem is driving extremely rapid changes in the lending landscape. These factors are breaking traditional credit barriers, allowing lenders to assess underserved segments using combinational of traditional and non-traditional data points to enable frictionless, real-time credit delivery. As this evolves, the Digital Personal Data Protection (DPDP) Act ensures that data democratization is balanced with stringent privacy and consent frameworks. Combined with transformative power of Generative AI, the future of lending will shift from being a process digitization play to an intelligent and deeply personalized financial ecosystem.

At the heart of this transformation will be the tech-enabled and intelligence-led experience, where speed and relevance are paramount. Customers today expect drastically improved Turnaround Times (TAT) along with timely and appropriate product offers tailored to their specific needs. Platforms like Chola One deliver this by providing a seamless, end-to-end digital journey— from origination to servicing. Simultaneously, ecosystem partners such as dealers, brokers, and OEMs will continue to be empowered by platforms like Gaadi Bazaar, which integrate vehicle trading, auctions, and trade advances into a unified digital workflow, creating a cohesive and highly efficient value chain for all stakeholders.

The foundation for delivering a delightful experience for our customers will be based on continuous optimization of internal IT operations through the increasing adoption of AI. Generative AI is revolutionizing the entire software development lifecycle and IT operations. From AI-assisted code generation and automated testing to intelligent support and proactive operations, AI will help in accelerating delivery timelines while improving system resilience. This deep integration ensures that the technology backbone remains as agile and responsive as the market demands.

It is, however, critical that the digital innovation cycle be firmly anchored by robust cybersecurity controls and a secure infrastructure. Delivering next-gen solutions requires protecting every layer - endpoints, networks, applications, and data - while ensuring strict compliance with evolving regulations like the DPDP Act. Beyond technological defenses, the focus also extends to establishing a security-first culture by increasing employee awareness against emerging threats. By balancing aggressive digital innovation with uncompromising cyber protection and risk mitigation, we intend to build enduring customer trust while

establishing a platform that blends innovation and customercentric experience as driver for business growth.

RISK MANAGEMENT

Chola recognizes that effective risk management is essential to achieving strategic objectives and ensuring long-term sustainability. The Company is committed to identifying, assessing, and mitigating risks across all levels of the business through a structured and proactive approach. Chola has always focused on creating a robust organisational risk culture designed on operating procedures, internal controls, and contingency planning to enhance its risk management. Chola believes in transforming itself to reinforce the existing risk mitigations and to meet the new & emerging risks.

During FY 2025-26, the Risk Management function continued to strengthen the Companys risk management framework through structured review, independent assessment and ongoing monitoring of material risks across the enterprise. Enhancement of key risk management components, including Risk MIS, Risk Appetite Statement, Enterprise Risk Management (ERM) Plan, Risk Management Policy and ICAAP framework was undertaken to ensure alignment with the Companys evolving business profile, scale of operations and regulatory expectations.

Capital Risk: In line with regulatory requirements, the function reviewed the Internal Capital Adequacy Assessment Process (ICAAP) during the year. This included:

• Assessment of material risks at an enterprise level, including emerging and non-financial risks

• Conduct of stress testing and scenario analysis, including evaluation of vulnerabilities under adverse conditions

• Review of capital adequacy against the Companys risk profile and alignment with business growth plans

Liquidity risk: In the area of liquidity and balance sheet risks, the Risk function reviewed the adequacy and effectiveness of liquidity risk assessment and management practices, including monitoring of risk positions against internal thresholds, funding profiles and evolving market conditions.

Cyber security & IT risk: With increasing digitalisation, the Risk function expanded its focus on technology, cyber and digital risks, including:

• Assessment of cybersecurity threats such as malware, phishing attacks and data breaches

• Review of system vulnerabilities and readiness to respond to security incidents

• Validation of key controls including firewalls, encryption standards, multi-factor authentication and incident response mechanisms

Credit risk: A key focus area during the year was independent monitoring and challenge of risk exposures across credit, financial and portfolio risk dimensions. This included detailed evaluation of portfolio quality, sanctioned loan risks, takeover exposures, writeoff trends and QMA movements, along with root cause analysis of portfolio stress drivers to enable timely corrective actions.

The function also monitored digital lending risks, fraud risk indicators and Early Warning Signals (EWS) to enable early identification of emerging credit stress and support proactive mitigation measures across portfolios.

Operational risk: The Risk function undertook enterprise-level assessment of material risks, including evaluation of control effectiveness and monitoring of inherent compliance risks across operations. Specific focus areas included:

• Review of outsourced activities and risk management practices in factoring operations

• Assessment of Business Continuity Planning (BCP) and Disaster Recovery (DR) drills

• Evaluation of operational resilience and readiness to respond to disruptions.

Regulatory Compliance risk: The Risk function also strengthened its coverage of regulatory, compliance and conduct risks, including:

• Assessment of Money Laundering and Terrorist Financing risks (AML/TF)

• Review of legal cases and regulatory exposures

• Monitoring of regulatory developments and compliance risk areas.

• Further, the function monitored reputational risks through peer benchmarking and tracking of regulatory actions and public disclosures, with the objective of identifying emerging risk signals and reinforcing a preventive risk culture across the organisation.

• The Risk function also continued to monitor people risk, including critical skill dependencies and resourcing aspects relevant to risk and control functions.

Emerging risks: The emerging risks were tracked through periodic market bulletins, covering the macro-economic development, impact on portfolio behaviour to enable strategic alignment and long term impact on portfolio behaviour.

The function also strengthened its oversight on strategic and emerging risks, including geo-political developments, climate related risks and governance effectiveness, and tracked progress of key risk management initiatives during the year.

The Risk Management function played a key role in providing independent oversight, strengthening risk frameworks and enabling proactive identification, monitoring and mitigation of risks, thereby supporting the Companys risk-resilient growth strategy.

RESULT OF OPERATIONS

The Companys Business AUM and PBT has steadly grown over the years at a CAGR of 31% and 25% respectively.

STATEMENT OF PROFIT & LOSS

Particulars	Mar-25	Mar-26	Growth %
Disbursements	1,00,869	1,11,642	11%
Assets Under Management	1,99,876	2,42,630	21%
Income	26,055	31,445	21%
Cost of Funds	-12,485	-14,374	15%
Net Margin	13,570	17,071	26%
Operating Expenses	-5339	-6574	23%
Provisions and Losses *	-2494	-3536	42%
Profit Before Tax (PBT)	5,737	6,961	21%
Current and Deferred Tax	-1478	-1741	18%
Profit After Tax (PAT)	4,259	5,220	23%

Note:- * Provisions and Losses include Management overlay of Rs. 200 crores having an impact of 0.09% of Average assets in FY 2025-26

BALANCE SHEET

Particulars	Mar-25	Mar-26	Growth %
Assets
Business Assets	1,81,930	2,17,571	20%
Cash & Bank Balances	9,401	14,611	55%
Other Liquid Assets	5,869	6,116	4%
Other Assets	4,448	6,772	52%
TOTAL	2,01,648	2,45,070	22%
Liabilities
Net worth	23,627	30,404	29%
Borrowings	1,48,280	1,79,314	21%
Securitisation	26,667	31,552	18%
Other Liabilities	3,074	3,800	24%
TOTAL	2,01,648	2,45,070	22%

KEY OPERATING MEASURES

Particulars	Mar-25	Mar-26	Change*
Net Income Margin	7.7%	8.0%	0.3%
Operating Expenses to Assets	-3.0%	-3.1%	-0.1%
Return on Total Assets - PAT	2.4%	2.5%	0.1%
Return on Equity - PAT	19.8%	19.7%	-0.1%
Profit Before Tax to Income	22.0%	22.1%	0.1%
Total Assets under Management - Rs. in crores	1,99,876	2,42,630	21%
Gross Stage 3 Assets	2.8%	3.0%	0.2%
Stage 3 (Net off ECL) Assets	1.6%	1.6%	0.0%
Provision Coverage	45.3%	47.3%	2.0%
Earnings Per Share - Basic in Rs.	50.7	61.8	22%
Book Value Per share	281.0	356.8	27%
Price to Book Ratio (no. of times)	5.4	3.8	-30%
Market Capitalisation - Rs. in crores	1,27,885	1,15,353	-10%
CAR	19.7%	19.2%	-0.5%

Note: *With respect to values, it is growth between periods and with respect to ratios, it is movement between periods.

CONSOLIDATED RESULTS

The consolidated profit after tax for the year under review was Rs. 5,232.61 crores, as against Rs. 4,262.70 crores in FY 2024-25.