Cholamandalam Investment and Finance Q4 PAT at Rs690 crore

The Board of Directors of Cholamandalam Investment and Finance announced the audited financial results for the quarter and year ended 31st March 2022.

Strong points:
The impact of the third wave on the Indian economy was found to be weaker than the previous two waves. Rapid nationwide vaccination coverage helped mitigate Omicron’s impact and bolster consumer confidence and business optimism. The company had recorded its best disbursements, collections and profitability in the fourth quarter of FY22. The outstanding performance was helped by strong signs of recovery in the auto and mortgage industry. All major CV OEMs recorded double-digit growth in March 22, helped by the recovery of infrastructure projects, the growth of the logistics and e-commerce sector coupled with the easing of the financing option. The strong rebound in residential home sales in the current quarter was helped by consumer demand after home buying was postponed due to Covid19.

Strong points:

  • Overall disbursements in Q4 FY 22 were Rs 12,718 crore compared to Rs 8,071 crore in Q4 FY 21 with a growth of 58%. Disbursements for FY22 stood at Rs 35,490 crore compared to Rs 26,043 crore in the previous year, registering a growth of 36% Y-on-Y.
  • Vehicle Finance (VF) disbursements amounted to Rs 8,785 crore in Q4 FY 22 compared to Rs 6,153 crore in Q4 FY21, representing a growth of 43%. Disbursements for FY22 stood at Rs 25,439 crore compared to Rs 20,249 crore in the previous year, showing a growth of 26% year-on-year.
  • Loan against property including affordable LAP, companies disbursed Rs 1,978 crore in Q4 FY22 compared to Rs 1,191 crore in Q4 FY21 with a growth rate of 66 %. Disbursements for FY22 were Rs 5,862 crore compared to Rs 3,627 crore in the previous year, recording a healthy growth rate of 62% year-on-year.
  • The Home Lending Company (HL) disbursed Rs 441 crore in the fourth quarter of FY22 compared to Rs 538 crore in the fourth quarter of FY21. Disbursements for FY22 were 1,571 crore rupees against 1,542 crore rupees the previous year.
  • New ventures, Personal and Small Business Loans (CSEL), Secured Business and Personal Loans (SBPL) were launched last year and together with Small and Medium Business Loans have made disbursements of Rs 1,515 crore in the fourth quarter of FY22, representing growth of 702% and Rs 2,619 crore in the full year, representing growth of 319% YoY.
  • Assets under management as of 31st March 2022, stood at Rs 82,904 crore from Rs 76,518 crore as of 31st March 2021.
  • Profits after tax (PAT) for Q4 FY 22 was Rs 690 crore compared to Rs 243 crore in Q4 FY 21, reporting a growth of 184%. PAT for the financial year 21-22, were at Rs 2,147 crore against Rs 1,515 crore in the same period last year registering a growth of 42%.
  • PBT-ROA for Q4 FY22 was 4.8% and for FY21-22 was 3.9%, compared to 1.8% and 3.0% respectively in the same period last year latest.
  • The ROE for Q4 FY 22 stood at 24.6% against 10.4% the previous year.
  • The company continues to hold a strong liquidity position with a cash balance of Rs 5,341 crore at the end of March 2022 (including Rs 1,500 crore invested in Gsec shown in investments), with a total liquidity position of Rs 13 246 crore (including undrawn sanctioned lines) . The ALM is comfortable, with no negative cumulative lags on all time compartments.

The board of directors of the company has recommended a dividend of Rs 0.70 per share (35%) on the shares of the company, subject to the approval of the members of the company at the annual general meeting which s then. This is in addition to the interim dividend of Rs 1.30 per share (65%) for the financial year 2021-22 declared by the company on 1st February 2022.

Asset quality

Adoption of RBI Circular on Revised NPA Standards
RBI had issued a circular on November 21 ordering NBFC to adopt a stricter provisioning standard and therefore from 1st From November 2021, we started tracking DPDs daily and for agreements that exceeded 90 DPDs, we continued to classify them as NPA until all amounts due in principal and interest were collected in full. RBI had issued a clarification circular on February 15and2022, moving the implementation date to September 30, 2022. However, on a conservative note, we propose to early adopt these standards under the IRAC.
The ECL model layouts this year are being stress tested with the impact of Covid being factored into the PD and LGD calculations and as a result the ECL model layouts across the stages increased during December 21. Apart from this, we had also factored in a write-off of Rs 190 crore for long overdue accounts where further recovery is expected to be minimal. Towards these, part of the management overlay amounting to Rs 336 crore has been utilized and the management overlay provision carried on the books as of March 22 stands at Rs 500 crore.

The quality of CIFCL’s assets at the end of March 2022, represented by Stage 3 assets, stood at 4.37% with a coverage of provisions of 39.67%, compared to 5.85% at the end of December 2021 with a coverage provisions of 38.80%. The total provisions currently carried on the global portfolio are 3.04% compared to the normal global provision levels of 1.75% carried before the Covid-19 pandemic.

According to the revised RBI standards (circular of November 12and, 2021) GNPA% and NNPA% in March 2022 is 6.82% and 4.75% respectively. We are carrying higher provisions of Rs 564 crore under INDAS on IRAC.

The details of staggered assets and provisions are given in the appendix.

Capital adequacy:

The Capital Adequacy Ratio (CAR) of the company at 31st March 2022, was 19.6% against a regulatory requirement of 15%. Tier I capital was 16.5%.

Performance of subsidiaries / associates / JVs
The revenue of Cholamandalam Securities Limited for FY22 is Rs 40.12 crore and Cholamandalam Home Finance Limited is Rs 55 crore. Net revenues from two new investments, Payswiff Technologies Private Limited and Paytail Commerce Private Limited, are respectively Rs 49.3 crore and Rs 1.5 crore for FY22.