Chola Inv. & Fin. - Q4 FY21 first take - 'Strong on growth, in-line on asset quality'

- AUM at Rs765bn was up 14% yoy - overall disbursements were up 43% yoy in Q4 - Vehicle Finance disbursements were higher 31% yoy and LAP disbursements jumped 102% yoy

- NII growth was strong at 32% yoy, despite reversal of interest on interest, due to decline in funding cost

- Co. continues to hold strong liquidity position with Rs64.3bn as cash balance (xx% of borrowings)

- A sharp 75% qoq increase in employee cost depressed PPOP which declined 17% qoq - in our understanding, higher employee expenses could be partly driven by distribution of significant incentives related to disbursements and collections

- Gross Stage-3 assets increased by 0.2% qoq to 4% (a mild negative) - ECL coverage on it was maintained at a higher level of 44%

- Credit cost was higher in Q4 with co. making additional provisions of Rs3.5bn in the light of second wave - overall management overlay at Rs11bn (1.5% of AUM) as of March 31 - Total ECL at Rs24.4bn, 3.6% of the book

- Management commentary on market share and likely impact of the second wave will key. Stock has re-rated significantly in recent months (trades at 3.5x FY23 P/ABV).

Shares of Cholamandalam Investment and Finance Company Ltd was last trading in BSE at Rs.569.05 as compared to the previous close of Rs. 580.3. The total number of shares traded during the day was 141336 in over 3168 trades.

The stock hit an intraday high of Rs. 587.35 and intraday low of 564.65. The net turnover during the day was Rs. 81436425.

Source : Equity Bulls

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