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Nirmal Bang Report
Non banking financial companies faced multiple headwinds starting with funding crunch, Covid-19 outbreak and changing regulations. Despite these challenges, Cholamandalam Investment and Finance Company Ltd. has delivered on growth, quality and profitability by carefully calibrating its multi-product strategy, robust under-writing practices and diversified geographical presence.
Strong parentage led to reduction in the cost of funds by 183 basis points to 6.9% (FY19-Q2 FY22). The assets under management increased at a compound annual growth rate of 10.7% (FY19-Q2 FY22) and earnings at 21% CAGR (FY19-22E).
Cholamandalam Investment's collection efficiency remained strong at 115%/116% in September 2021/October 2021, slightly assuaging our concerns on asset quality (Stage-III assets at 6.2%, restructured book at 6.8% as on Q2 FY22).
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