Cholamandalam Investment and Finance Company Limited (CHOLAFIN) Q4 2026 Earnings Call Transcript

Good morning, everyone, welcome to the Good morning, everyone. Welcome to the interaction with management of Chola Mandalam Investment and Finance Company Limited. Today, we discuss 4QFI 26 earnings and management outlook. The senior management is represented by Mr. Velayan Subeya, Executive Chairman, Mr. Ravindra Kundu, Managing Director and CEO, and Mr. Arul Selvan, Chief Financial Officer. I would now like to hand over the call to Velayan for his opening comments, after which we'll take the Q&As.

Thank you, Nishant, for hosting the call, and good morning, everyone. I'm happy to take you through performance for Chola for Q4 FY26. So, first, we'll go through the dispersal growth for the quarter. So, Chola reported aggregate disbursements of 32,913 crores, which represents a 25% year-on-year growth for Q4, which resulted in AUM increasing to 42,630 crores. AUM growth remained healthy at 21% as at the end of the quarter, reflecting sustained momentum across the portfolio. Disbursements registered strong, broad-based growth across all major product segments during the quarter. The vehicle finance business reported 26% year-on-year growth in Q4, driven by sustained demand across vehicle with categories, with auto AUM increasing 18% year-on-year to 1,19,558 growth. The MSME segment, which comprises of LAP, SME, and SBPL, recorded 11% growth in Q4 disbursements, supported by strong demand and robust branch-led distribution. MSME segment, AUM, grew 29% year-on-year with LAP AUM at 52,295. We did a 26% growth year on year. SME AUM is at 9,338 crores, which is a 41% growth, and SPPL AUM is at 3,537 crores, which is a 46% growth year on year. The consumer segment delivered 45% year-on-year disbursement growth, driven by sustained momentum across product segments, which instantly launched gold loan business disbursing 1,130 crores in Q4 exploits. Home loan disbursements saw mild moderation in Q4 due to procedural timing factors including election-related administrative slowdowns, land record digitization mismatches, and localized lean marking delays in select markets, which temporarily extended verification and dispersal timelines. Consumer segment AUM grew at 20% year-on-year, including 23% in home loans, while C-Cell AUM increased 4% despite the exit from partnership-led businesses. In terms of profitability, our names improved by 40 bps year-on-year in Q4, driven by a gradual reduction in the company's cost of funds as interest rates softened during the period. Credit costs before management overlay declined by 20 bps year-on-year in Q4 across product segments, reflecting stable portfolio performance. To mitigate any negative impact on credit costs due to heightened global uncertainties, the company has provided a management overlay for Rs. 200 crores as a precautionary buffer. The overlay addresses potential second-order stresses arising from volatility in crude and refined fuel prices, risk of LPG supply shortfalls, and supply-side pressures in sectors dependent on global shipping and commodity flows. While core asset quality indicators remain resilient. Return on assets for Q4 FY26 stood at 4.1% before the overlay, compared to 3.6% in Q4 FY25, while return on equity for the quarter was 23%, underscoring improved profitability. We hold a strong liquidity position with a total liquid asset. Of 21,186 crores, which includes undrawn sanction lines, the ALM is comfortable with no negative cumulative mismatches across all time buckets. Our capital adequacy position stood at 19.21% in March 26, with Tier 1 capital at 1,473%. Out of the total issuance of 2,000 crore CCDs, mounting CCDs amounting 1,370 pros were converted in FY26. The balanced 630 pros of CCDs is expected to be converted in the first half of FY27. The board of directors of the company has recommended a final dividend of 70 per se per share, which is 35% on the equity shares of the company, subject to the approval of the members of the company at the ensuing annual general meeting. This is an addition to the interim dividend of rupees 130 per share, one rupees 35 per share at 65% for the financial year FY2526 declared by the company on 31st January, 2026. Finishing with that, I'll stop and we'll be happy to take questions from.

Sure. We'll now start with the question and answer session. The first question comes from Kunal Shah of City. Kunal, you can unmute and ask a question.

Yeah. Hi, thanks for taking the question. So looking at this outlook, no doubt we have created this overlay buffer. But if you can guide in terms of how we are looking at the trajectory getting into F527 and both with respect to AUM growth as well as credit cost, if you can indicate in terms of how the outlook will be and anything particularly on the vehicle finance side or any of the segments wherein we would have We have tightened the credit filters or improved the screening out there, how we are how we are incrementally looking at these segments. Yeah.

So, first of all, the credit filter side, I would like to mention that we have been continuously working to improve the Gini coefficient of the underwriting tool, working for all the eight divisions. So, that will help us to improve further improvement in credit cost. But in this financial year, we are still holding our growth trajectory between 20 to 23 percent, what we have been committing. And we are still hoping that our net credit cost will go down From 1.6% pre-overlay to 1.5, and our routers should improve then closer to 3.5% pre-tax ROA, which we have been discussing that.

Okay, got it. So you mentioned like in terms of the credit filters we have, sorry, I didn't get that exactly.

We have been working on the improvement of underwriting tool, which is a Gini coefficient, and that is actually beside the accuracy of the decision taken by us. We are working along with all the great managers of the company for each division to improve that. That has been there for last one year, and that has actually helped us to improve quality of the C-cell, CD, and vehicle finance during the quarter four, and which is going to be continued even in this financial year.

Okay, and that should help the overall credit cost trajectory of 1.5 odd percent.

Yeah, it should help us to get that number.

Okay, and no need for any further overlay. This doesn't include any overlay buffer as such. We believe like 200 odd crores which we have done. That is sufficient enough taking into consideration the current dynamics which are there.

Yeah, it is considered by is a more precaution, considering will there be any heightened credit cost of this?

I believe it's certainly.

So as we talk now, there is no relief for any problem.

Perfect. Yeah.

Thank you.

You go next.

Okay. Am I audible?

Yes. Yes.

Okay. So I just want to understand, see for April 26, you know, these two key OEMs, Tata and Aishar have reported fairly good growth in their CV volumes. Now, should that be taken as a proxy for how the on-ground sentiment is amongst the CV operators that despite the war and despite the, you know, the disruptions that have been there domestically, They are still going out there and buying trucks because they see the good demand for transportation, or do you see some risk to CV sales momentum sustaining, you know, in the near term or even in the medium term? And that could be a risk, you know, to your growth guidance or estimate. That's my first question.

Yeah, see, not only commercial vehicle segment is passenger vehicle also has shown the good number in the month of April. And we have been we have got the opportunity to see our number also. So our number with respect to sales credit collection as compared to the April 2025 has been very good. So as of now, the on ground any, you know, we have not seen any change in behavior.

Understood. So, what you're essentially saying is that despite all those disruptions and the narrative being that there is a lot of risk, and I think rightfully so, you've also taken some management overlay, there is nothing on the ground, at least in terms of data, that would suggest that things are deteriorating. Is that understanding correct? Absolutely. Okay. My second question is that for FY26, can you give me the total recoveries cost? This same number in FY25 was 441 crores. What was this number for the full year FY26? And then I have a follow-up question on this.

So maybe we'll come back after seeing the number. And then you also ask the question.

So what I wanted to ask is that, you know, typically what we've seen is that in years when there is asset quality pain, the recoveries cost grow at a higher rate versus say the overall business growth or, you know, the overall OPEX growth. I am assuming that it would have been the case this year also. But with the asset quality improving in FY27, your recovery cost growth should be much lower or it may not increase at all. Could that be one of the levers to your OPEX ratio improvement next year? I just want to get your thoughts on this.

Yeah, I think you're asking about the collection costs in terms of percentage to the asset. And if you see that the collection cost is a part of the total operating expenses, and total operating expenses has been fairly at the same level, it is at 3.1% compared to last year of 3%. So nothing has gone up in the operating expenses, in spite of we have opened up gold loan business, and also we expanded in consumer durable, that shows that the recovery cost has not gone up. Recovery has improved because in the quarter three, quarter four, we have seen that capacity utilization has improved. And also we got the opportunity to get, you know, a resolution through surfacing the project. So both put together the collection efficiency has improved. Another important thing we have been saying that our stage two has been improving throughout the year, quarter three, quarter two onwards. That shows that the, you know, in general, the, you know, customers Payment, repayment capability during the year for the customer who are in 0 to 30, those who are in 31 to 60 and 61 to 90 were actually good. And that's the reason Stage 2 has come down. And finally, Stage 3 has also improved in last quarter.

Understood. Thank you. Do I have an opportunity for one more question?

He is good.

Okay. See, when I look at your total gold loan AUM, and then when I divide that by the total active customer base in the gold loan segment, that comes out to be some five, six lakh rupees of exposure per customer. I just wanted to get some sense on what kind of ticket sizes you are doing in gold loan segment. And what kind of yields are you charging to customers? I just want to get, you know, a comprehensive color on the kind of customer segment that you're targeting. And how are you positioning yourself versus the other gold on NBFCs?

Yeah. So if you look at it, our average ticket size for a loan in Q4 has actually come down from, you know, when we started, it was around 3 lakhs. Now it has come down to 2 lakhs. So we are getting more granular in terms of our acquisition, you know, strategy. So yes, I think in gold loan, typically what happens is that a customer takes more than one loan. Right. So typically, when you look at a total customer exposure, it could anywhere vary between five to six lakhs per customer, but in terms of the average ticket size, you know, at two lakhs, now coming to the, you know, you're saying that even your

customer would have around one and a half to two loans for the total exposure would be four to five lakhs.

Yeah. Yeah. So, so, uh, So, as we have always been maintaining, our yield also has been very healthy as compared to our peers.

So, the ticket size is 2 lakh rupees now. It started with 3 lakh rupees come down, and yield has gone up to now 15.

So, the yield is also very, very pretty strong in terms of, you know, it's pretty healthy as compared to our competitors. So, if you look at our strategy is to, you know, get as much granular as possible, get into more of the retail customers, and we have been successful in doing that over the last nine months of operations.

Understood.

Thanks a lot for all the answers. Thank you. Yeah, Viril from IFL, you go next.

Yeah, hi. Thanks for the opportunity and congrats on a good set of numbers. I had two questions. One is on the C-cell piece. When I see our segmental numbers, I think we are now starting to see a genuine turnaround, I would say, on the asset quality as well as I think we are getting our growth over here. Can you just highlight what is now incrementally you are looking at this segment in terms of say the growth potential number one and number two is I see that the expense of the OPEX levels also have gone up in this quarter. Where are we investing in terms of distribution which product segments and what can be a steady state say an ROA outlook for say F527 and 28 in this segment and whether it will be to what degree and extent ROA accretive. So that's my first question, sir.

So C-Sale now has got two businesses. One is unsecured personal loan, business loan, and professional loan, one side. And other side is a CD, mobile lending, and also direct to customers, online, in-house fintech. So these are the two businesses we are doing it. You have seen that our loan losses has come down to 5.2% in the quarter four, and that is going to continue to further improvement. So, that's the reason. If you take 2.3% ROA of the quarter 4, it should definitely cross 3% ROA, pre-tax ROA in the financial year, which is going to be due to further improvement in the loan losses. And also, the NIM also should improve because of the consummate also growing. That is the one thing. In terms of growth, the disbursement growth has been 39% in quarter 4, which is going to be continued because quarter 1, quarter 2, we had low base benefit. The important is the asset growth, which is now just started to grow. So it is now at a 4% level. We are expecting that by the end of this financial year, the C-cell both put together unsecured PLBL and professional and CD and digital and mobile put together should be, you know, Now, at least in the quarter four, we are expecting that start hitting 20% asset growth.

Thanks.

Operating expenses is basically high in the quarter four because CGTMS insurance we have paid. And now in this financial year also, we are going to pay, which is going to get distributed across all the quarter. So this impact of 6% will not be there. It will go down to the level it was 4.5%. So that's how we are expecting that there is going to be improvement from operating expenses as well as the net credit costs, which will help to increase This is the ROI from 1.6% of this financial year to 3% or more.

Got it, sir. Very clear. And just as an extension to your response, you mentioned that you have paid premiums for the CGTSME in this pool. So what percentage of the BL over here will be covered by this insurance?

As of now, we have covered around 70% of our assets. And now we will continue to improve that probably we may go up to 80-82%. That is what our plan is to cover the asset in unsecured business.

Okay, and this will be around 10-12,000 crore asset in the X of CD business.

No, it will be around, no, it is only BL portfolio that we are going under CGTMSC and it will be around, you know, 3000 to 3500 pro.

Yeah, so as I mentioned that it actually include BL, BL professional in one side and other sides CD, mobile and D2C2. So the BL part is actually 5000 pro, isn't it? Of that 80% is around 3500.

Got it, sir. Very clear. And, sir, the second question is with regards to on the asset quality front in April, you did highlight that you are not seeing anything, say, from a customer or the borrower behavior. If you can just throw some light in terms of how are your bounce rates trending and is this basically across the segments, vehicle finance and also the home loan lab, if you can just give some color over there. Qualitative as well is okay.

See, the most biggest benefit has to come from vehicle finance, isn't it? So, I think Balraj is the right person to talk about it, what he has seen actually in the month of April.

See, we have just closed April. Two, three things. The early defaults, non-starters compared to 24 April, 25 April, we are much lower in the month of April 26. Even this is almost at par with April to March 24 and 25 numbers. And we have not seen much of a deterioration. Normally, April, March to April, there is some level of deterioration. But this year, it has been better. Second thing, even in the first card, NCL numbers are lower than last April. That's where we are.

Got it. This is super clear, sir. Thank you so much, and all the very best.

Thank you, Viran.

The next question comes from Abhijit from Motila, Roswell.

Yeah, thanks, Nashant. Hi, sir. Good morning. Sir, just on the ROA tree, I mean, last two years, I think you'll also acknowledge has been particularly tough, especially from the vehicle finance side. But last, sir, just mentioned that in April 2026, non-starters have been much lower than what we saw in April of last two years. So just trying to understand versus ROAs of 2.3, 2.4% that you've seen the last two years, you'll remember when it started these newer business lines, the whole idea was to get to better ROAs over a period of time. I acknowledge last two years on the NCL line. Now, I mean, when you said that this year, FI27, we should look at a credit cost of 1.5%, just trying to understand which segments, vehicle being one, C-cell, you'll remember last year, we were incurring higher credit costs on that book, which was originated through FinTech Partnerships. So just trying to understand, I mean, what all levers will we have on the ROA tree, which can lead to an ROA expansion this year and next year?

Yeah, this is Arul. So what will happen is NIMS will hold at same similar levels at around eight. What will happen is the newer businesses will give better yield, but that may get offset on a conservative basis by a slightly higher cost of funds that may happen over the full year of FI27. So I'm looking at 8% NIMS to hold because of these two combinations. OPEX will be in the range of around 3% to 3.1%. So that would more or less again remain same. The saving will come from NCL, which will come from Vehicle Finance as well as CSEL as you rightly said. These two coming through will get you the 20 basis points comparison. Listen, today we are at 3.3 after considering management overlay of our online webs so that if you remove our current NCL is 1.6, even if we do 1.5, we should be at the 3.5% pre-tax Thank you very much.

Got it, sir. And sir, while you're here, just wanted to understand, I mean, what will be the approach to ARCs in the coming years, basically trying to understand this SB12 book that we have that is not something where we can apply surface A. So what will be the approach to ARCs in that business?

Our focus would be to use ARCs wherever we are not able to live, any loans which are of less than 20 lakhs number, whether it is from Hong Kong or SBPL or, you know, these are the two broad businesses, SME and they'll have ticket sizes are larger. So they will suddenly increase our VC. So they may not go for the ARCs in that context. Got it.

And thank you, sir. And last question is for Ravi, sir. Sir, just trying to understand within the vehicle financing book, various sub-segments, I mean, you mentioned earlier April trends are looking good, but are there any product sub-segments or geographies where you are seeing anything unusual or everything is as per expectations and till now we have not seen any impact of the world?

So, for the last three years, we have been going through the problem, either from the geography point of view or the product point of view. And that is why we were saying always that it is a, you know, down cycle of vehicle. And that is what impacted the vehicle sales, whether it is a small ticket size loan, like the Tata S type of vehicle, which is a small commercial vehicle or light commercial vehicle, even heavy commercial vehicle. So, all segments got impacted and from Q4 onwards, it is started improving. Now, even in the month of April, we see that the demand for the vehicles are still holding. And as Valraj mentioned that all the delinquency, you know, with respect to the early default non-starter, with respect to all product segments, things are looking better. So, we have been saying that we will gain little bit market share also in the vehicle because things are looking better in the last year we said that. So, it is continued. And I will say that, you know, last year when we started, we were having three engine of Chola, LAP, HPPL, and HL. They were driving the growth. Now, all eight engines are driving. So, that is what is our comfort level. And we are diversified within vehicle finance, we are diversified within Chola, we are diversified in the geographic point of view, and that will take care of the uncertainty which is there in the market.

Got it. This is very useful, sir. Thank you very much and I wish you and team Chola the very best.

Thank you. Thanks. Next question comes from Deeb of Bandhan.

Hello, sir. Thank you for the opportunity. Am I audible? Yes, yes, yes. Sir, one quick thing. We are at around 6.94 times gearing and guiding a growth of around 20 to 23%. So any sense or clarity on when will we raise some capital if needed? And I mean, not on the quantum, but any timelines for those? Because I think we have, I mean, 19.2% is our capital adequacy ratio. So how much of this will be, I mean, will we consume some amount of capital for growth this year? Here as well, or our internal accruals will be sufficient. Any clarity, sir, on this part? And, sir, one follow-up on this is that any internal policy or something that we have in mind, I understand that we have been reducing gearing from 7.17 times last quarter to 6.94 currently. So, sir, any internal policy or any guidance that you would like to give for the gearing ratio?

We more acutely follow the capital adequacy ratio and we have given guidance there that if the tier 1 ratio comes to 13, we will certainly start looking for equity. And in a situation where we are returning a 3.5% pre-tax rota and growing less than 23-25%, we should be able to be self-sufficient in providing capital. This has been our stated, you know, way of looking at capital requirements. Having said that, if there is good growth opportunities, we will certainly look at, you know, bringing in additional capital to strengthen the growth. This will be done in consultation with promoters and other senior people in the organization as we move forward, evaluating the market situation as well as the growth potential. So, but the stated policies I have already given you.

Okay, sir, and one more question. I understand we are at AA plus positive from ICRA and AA plus stable from all other rating agencies. And, I mean, sir, any initial talks, what they have been saying to, I mean, to take Chola to a different level from AA plus. So any steps that we are following there or, I mean, in such scenarios, I mean, anything that you would like to highlight on that part?

No, we are in discussions with them and we will keep evaluating, but as you know, it is not like as you know, given formula that you reach a certain you know, numbers, then they will automatically give you. It is both a political as well as a quantitative approach to the rating. Many of the other competition will be getting the AAA messaging, parental support, etc. But unfortunately, we cannot do that because there is not any dependence of any of the parent organizations on shoulder for their funding requirements, etc. So that being the case, we continue to be AA Plus from that time.

Sure, sir. I understand. I mean, the positive trigger is also a qualitative one. Thank you for the input, sir. All the best for the next year.

Thank you.

Next is Abhishek from HSBC.

Yeah. Hi. Good morning. So just a few questions. First on vehicle loans this year, what is the disbursement and AUM growth that you're looking at?

So vehicle finance, we are expecting to continue the project where we are as of now in quarter four. So that is coming to around 15 to 20% disbursement growth and around 18% asset growth.

Okay, and considering that there might be some disruptions, even then you're confident that you can do this level of growth in vehicles this year? Yes, yes, that is what Polaris is committing. Got it. Got it. Right. The other question is the fintech book, how much of it is left to run down now? 300 to 400 crores, but

this will be a little long tail because it will run through the entire year.

Because these are the left out if we aren't one year type of. Okay, but it's quite negligible that way. Okay. The third thing is in overlay provisions that you have made, have you changed any PD-LGD assumptions and does the run rate credit cost change or this is just a one-time activity and you go back to the run rate credit cost?

No, PD-LGT we have not changed because if we change PD-LGT then there is no overlay in the concept. The overlay has been arrived at based on a past experience of similar situation when Covid and the diesel prices went up and you know how the delinquencies had sort of panned out at that time. Similar approach we have taken to look at what should be the overlay and arrived at this overlay. So there is no change in the PD-LGT.

Got it. Yeah, because some other NBFCs are having to gain some of these core assumptions. So nothing like that, right? The ECL model remains as it is.

Because the PDLGT is based on past experience and past data. You can't change the data for that past period. The past period gives me a PDLGT. There are two options to do it. One, add it to the macro or add it as an overlay. Now, macro information available is again citing a much better GDP growth and much better forecast because this was done pre the IMF macro data that we rely on has come pre February before the war. That is why we said we will consider what shall I say events that happened post February two Don't factor in this orbital.

Got it. And CGT, SME, MSC, the cost for this quarter would be roughly around 40 crores. Yes, around 35 to 40 crores.

38 crores.

Perfect. Perfect. Just one last quick question on HL yields. Now, that inter-quarter movement is because of assignment and up-fronting of income or is there something else?

No, no. Assignment income is not given credit into the respective business portfolios. That's separately shown. And we have not assigned any HL book also, incidentally. It was more some other portfolio.

Arun, this 50-way jump.

Primarily coming, this is coming from the ARC accounting where ARC amount is shown as income and then the NCL is high. These two nets of overall quota remains same. That's given as the footnote at the bottom.

Page number 72 footnote is there. 0.39% is the income because of that.

Okay, got it. All right. Thank you. Those were my questions. And all the best. Congratulations for the quarter.

Thank you. Piran from CLC, go next.

Yeah, thanks. Congratulations, team, on the very strong set of numbers. Just firstly, what would it take for home loan disbursements to pick up? It's been in this 1,800, 2,000 crore range for now seven, eight quarters.

So, the point here is, you know, as of now, we maintain a steady growth rate of 23% on the book. We see, you know, this Q1 should be slightly better. And last year, Q3, Q4, we have seen the encrypt numbers. We crossed 2000 crores also in Q3. So, we expect this year, we should be clocking in 12 to 15% disbursement growth, and we made a steady growth on EM side around 25% plus.

But sir, why has it been lagging? What will change next year for growth to pick up to 15% if I ask it that way?

Yeah, so this is basically, you know, when we started disbursement four years back, our penetration was only in south. So all the scale up since the last three years have come to pan India presence. So the branches we have added has started kicking in value. So the proportion of south is continuously coming down and the other areas of India, we are managing it good. So, we see the incremental business coming from other locations in terms of productivity hike and also the branches are getting mature. So, next year is the year where our development will scale up, the efficiency will go up, and we will maintain the Ruta of 4.2+. See, one thing which we mentioned in the

note itself in the beginning, Chairman said that there has been some delay in the completing the documentation to the election because there are two states in the South elections are going on. So that has actually reduced the both the disbursement of LAP and SHM. But that is not impacting the overall asset growth. So we are quite confident that we will be clocking 25% plus Asset growth in the HL and LAB and as well as there are two more mortgage businesses we are having, SBPL and SME, there the growth will be higher than 30%. So, put together the mortgage business growth is going to drive the overall growth of the company and new businesses like CSAIL, CD, GOLD are also supporting that. That's the reason we are saying that we are quite comfortable in holding our commitment of growth of 20% to 23% for a company level.

Understood. So, secondly, on vehicle finance, I just wanted to understand, let's say, fuel prices go up 10% tomorrow. How much do you need to increase freight rates to offset that and maintain steady profitability per truck?

See, there are two types of customers. One is the, and especially for the heavy commercial vehicle segment alone. One is that we commercial vehicle segment in our business is only. 27% which is very small percentage. Rest of the businesses are small commercial vehicle like commercial vehicle, passenger car, construction equipment, where the fuel does not impact much. It impact only the heavy and within the heavy, it impact only the long haul transporter who are burning more diesel because they run say 300 km on an average in 20 days. They will run for 6000 10,000 kilometres and fuel efficiency is 3 kilometres per litre, then they will have to buy 2000 litre. And if the diesel prices goes up by 20 rupees, which is 20% or maybe slightly higher than that and 25%, then they will have to spend 50,000 for the extra. Now, total income after paying all kind of thing in the long haul transportation is 1 lakh rupees. So, that 1 lakh rupees even after 25% So, if the demand goes up, they will actually have a saving of 50,000 rupees. That will impact their standard of living definitely, but then it doesn't impact the EMI payment and other repayment. That's one. So, that is applicable for long haul transporter. Long haul transporter is a fleet operator. We are into the small road transport operator who are operating within the city or within the state. So, therefore, passing on the freight actually, you know, increased diesel prices is easy for them. Those who are working under contract, you know, large fleet operator with the contractor or low load provider, for them it is not easy immediately. So what we see that actually because of the heavy commercial vehicle portions are very small for us and also more as a SATO, diesel prices increase will not have very highly impact. Our problem is demand. If the demand is there, the load is available. Then it will be easy for everyone to pass on the price.

So, but one fundamental question, why will fuel price not impact LCV operators? Is fuel cost a smaller proportion of the revenue?

They are not running 6,000 kilometers. Their run is small. The small lead they run. And also market load operator, they take load from the open market and they pass on it. It is a daily pricing. It is not a fixed pricing, which you have to work on a particular way.

Yeah, no, in heavy is the buyer of kind of logistics has much more clout.

Okay. Okay, fair. Just secondly, and this is probably very qualitative, but which of the end segments are more, you know, price sensitive or price elastic? As in, for example, if freight rates go up 20% tomorrow, where will we see a drop in demand because of the freight rate rise? So for example, if I'm shipping iPhones and the freight rates go up 20%, there's obviously not going to be a drop in demand because the freight cost is a minuscule proportion of the iPhone cost. But there'll be many other sectors where this would lead to some sort of elasticity of demand. So if you could just maybe touch upon this qualitatively, that'll be useful.

See, actually, what you're saying, the freight goes up. Freight goes up only when the demand is there. The demand is that freight cannot go up, isn't it? So that is what is the basic thing. If there is a demand, if the loads are available, then only transporter can ask for more freight. That is the point one. Point number two is that the. Transportation cost doesn't impact the demand, it's actually more the air inflation.

I think Piran's question is on N segments. Your answer, Piran, actually, your analyst colleagues and other sectors will be able to give you the best answer because basically, the data point you need, Piran, is what is logistics cost is a percentage of the overall revenue Associated with the product. Now we know that in some heavy infrastructure sectors. Logistics cost can be as high as like 22% or even like 24% of total cost structure. So obviously those, and I think you, I mean, your analyst colleagues will easily be able to give you that breakdown and that analysis is fairly simply available as to what is logistics cost as a percentage of overall cost to the sector. But I think broadly we know that the heavier infrastructure sectors have a higher logistics cost as a percentage of costs or revenue.

Understood. Okay, I'll take it offline for further details. Thanks, and congrats on the quarter once again.

Thank you. Thank you. We have a large participant list for questions, so my suggestion is just to keep it brief and maybe one or two questions. Subranshu from Philip Capital, you go next.

Thanks, Richem. Good morning, Commissioner. I will tell you two questions. The first one is the growth number that you gave, that's on the disbursement. So if you can split this number into business-wise, I think you've already given for vehicle finance. For the rest of the businesses, if you can split this growth for 27, what kind of growths we can look at for each of the businesses. Second is, how many people do we deploy in collections? And again, we can split that business-wise. Thanks.

Subranshu, I can't give you business guys this data, these are not, you know, we have a lot of data, and I think- At least the total number of people in connection, sir. The number of people we can give you, that is around 30,000 people we have on the collections, that is there. But independently, each business-wise is very difficult to share because that's not a problem. That's fair, sir. That's fair. I'll take it offline. Thanks. The first part of the question, sir, the growth numbers. Growth numbers also we have given you AM growth. We have said it will be between 20 to 23% as we have talked about earlier. And independently, I think vehicle finance, we have said 18% growth in the lap and HL will be, you know, growing in the about 25% to 30%. The rest of the business which are new because the price is low will actually clock a larger, you know, percentage, but But their number would average up to the 20 to 23 percent I spoke about.

Right, sir. And if I can just squeeze in one last question, sir. If I look at the LAP PBT as a percentage of total PBT, sir, it's roughly at around 30-31%, which is quite high versus the rest of the previous 5-6 years, sir. Earlier, it used to clock anywhere between 19-22%, and this is a huge spike. So any reason it is here or we are likely to see this come off, if we can elaborate on that, it will be great.

So thanks. They have been growing their book quite decent growth and costs on literate are also low, so that's good and we are quite happy about that and we like to continue that.

It will stay at around 30%. Yeah. Right, right. Understood. Thank you so much. It was great. Thank you. Best of luck for our next one.

Thank you. Thanks. Dudesh from Investec, you go next.

Thanks, Neshant. So my question is on branch addition. What are the plans to add branches in vehicle, home equity, and home loans in FY27?

Welcome to America.

The point here is, we already have the vehicle finance branches. Only for us is the extension of putting manpower. We are planning around 60 new branches in Q1 and Q2 40. So, 100 branches in home loan will be in next financial year.

These will be shared branches of vehicle finance. Unique branches would be the gold loan branches, which should be in the range of around 300 plus.

We will always be part of the BMP.

All the other businesses would mostly be in the vehicle finance branches. Vehicle finance branch by itself would go up by around 100.

It's basically for the other divisions. It's deployment of manpower in the branches, which will create the new branches.

100 in VF and then probably 300 in gold. That will be the branch addition.

100 in VF where other branches would also start participating. Each of them would start participating in existing VF branches and their growth like what Prashant said. They will start operating out of existing VF branches where they are currently not operating.

The count would be 100 in HL and 100 in LAMP. 100 in HL.

So don't add up all the numbers to arrive at The total number of branches for Chola, that's what I was trying to do. Sure. Thank you, sir.

That's it from us. Sorry, just a clarification. Gold branches addition is 300. And what is the current base?

Gold load is conducting 360 more. Today, we are at 120, 480. HL will increase 300. Lab will increase 300. Similarly, C-cell and CD are also likely to increase 100 branches more. FME is going to work by 20 years.

And gold tends to be exclusive, right? I mean, there is no shedding of branches.

Gold die out will be exclusive. The rest of them will go.

Perfect. The next question comes from Shripal of Aquarius. Shripal, you can unmute and ask a question. It's a good quarter.

My question was on vehicle finance front. So within that, HCV has seen a very strong growth this quarter. Are we seeing similar trends in April as well? And how is the competition from banks in this particular segment, especially on the newer side?

So, as of now, in the month of April, We have grown across all the segments. We have grown in passenger vehicle, we have grown in two-wheeler, we have grown in heavy commercial vehicle and NCV. Across the product, we have seen and we have been able to increase our market share.

Okay. And on the competition from bank, if you could give some colors.

As of now, since we have grown. We have not seen that. It is similar level at where it was.

Okay, got it. And is it the trend in the newer segment as well? Because PSU banks who are hurt, they have become very aggressive in that particular segment. So we are not seeing anything for us.

They are into passenger.

We are not seeing any significant shift in the competition behavior in the last. 4 to 5 months and in April also there has not been any changes. Thank you, sir.

Thank you for answering my question and good luck for the next one.

So, apparently, as per CMI data, freight rates have already gone up in April versus March, and apparently, you know, some of the data suggests 10% month-on-month growth. So, is this something which has to do with demand, or is it something, you know, in anticipation of fuel prices?

Demand also. As of now, diesel prices are at the same level.

Demand. And has been strong in April. Yeah, sorry, I'm not sure if you're audible, you're saying demand is strong in April.

Yeah, demand has been strong in April. The prices have not gone. So fuel prices cannot be done for increasing the freight.

Got it. Yes, so this was the last question. We don't have any further participants in the queue. Anybody who wants to ask a question can raise their hand. So, I think, yeah, that's it. We are done. Thank you very much. Thank you. Thanks, management, for giving us an opportunity to host the call. Okay, we have a question from Harshit. Can we take that? Yeah, okay. Yeah. Harshit, you can. You can ask a question, yeah.

Sure. Hi, sir. The question was on the cost growth itself. So when we look at FI26, employee cost was around 27%. But going forward, obviously, we want to invest in gold loan and we want to invest in newer businesses. But how should we look at the overall cost growth versus the AUM growth? And yeah, I think on a net basis, should it now start tracking AUM growth or we should start getting some operating leverage out there?

I think it will take another year or so to get any operating leverage because we are adding new crunches for most of the business. We just spoke about it. So we will still continue to hold it at the 3% overall to the average assets. That's what we have.

So, sometimes we are higher at 3.1, but I think we should work at that.

Right now, I wouldn't want to factor it. That's it. Got it.

So, the idea was to just check because given, in gold loan, assumption was that typically the break-even periods are shorter. Compared to non-gold, non-business.

There is a large amount of capital. These are exclusive branches, and then people have to be recruited. And people have to be recruited. Unlike vehicle finance, it will not be people who are new or raw. We need to bring in experienced people. There are other initiatives on the IT side, which is on the AI side, which is also bringing in larger costs. So I think let's not count too many now ahead of what we are. Understood, sir.

We'll take the last question from Banti Chawla.

Okay, thank you for the opportunity. Am I audible? Yeah, go ahead. Yeah, thank you. Yeah, so as we have seen, new business part or CSL, which we were struggling with respect to asset quality and all are doing good now. We are confident on that. Vehicle financing was some bit of a pain in terms of asset quality. That is now out. And growth, we are very much confident in vehicle financing. And already we, in terms of West Asia crisis, if you are seeing, you are saying already we have an overlay of 200 crores on the credit cost per se. So then too, we are still guiding for credit cost as a whole from 1.6 to 1.4. If we go with the history, we have been in the range of 1 to 1.4. So, what still getting us to still give a credit card guidance of just 1.5%, we can easily touch 1.4% with respect. So, what is that creating us back or are we being conservative in that sense? If you can share some bit of a thought process on that.

See, 1.5% is the, you know, idea for this year. So, from 1.5, if we get it, then again, next year, we have to reduce it to 1.4. So, every year, we have to improve upon. So, we don't want to take more targets from you all. We have to achieve every year. Let us see that how much we can do this year. And based on that, we will try our level best to do the, you know, across the digital. T-cell has started just improving. Another thing is that we need to understand the high yield business, which is C-cell, C-D, Then digital as well as mobile. All are having a little higher net credit cost by design. And if they are growing, then that higher credit cost also will be there. At the same time, moderate businesses are having a lower credit cost. And then we have vehicle finance, which is an average. So all three segments, we need to look into it and then arrive at an actual credit cost, which is going to be standard for us. Like in the past, it used to be 1 to 1.2%. You need to define that. But that can be defined within next one, one and a half years or two years down the line once. All eight businesses are set. As I mentioned, all eight businesses started doing well. If we work for another two years, we will come to the conclusion that what would be our future ROA and what would be your future NCL. As of now, let us actually hold it at 1.5% for this financial year. We will try to do better.

That was very helpful. Thank you, and best of luck for next year.

Perfect. Thank you. Perfect. That was the last question. Thank you very much for joining us. Thank you, management, for giving us an opportunity to host the call. Thank you. Thank you.

Thank you. Thank you. Thank you.