Cholamandalam Investment & Finance Company Ltd is poised for a significant milestone in FY25, with total disbursements set to exceed ₹1 lakh crore, driven by a projected 20-25 per cent growth. 

In FY24, the Murugappa Group NBFC saw a 33 per cent increase in total disbursements, reaching ₹88,725 crore.

For FY25, the company anticipates 20-25 per cent growth in total disbursements and 25-30 per cent growth in AUM. However, these are preliminary estimates and a clearer picture of the growth rate will emerge later, the management said during the Q4FY24 earnings call.

Even with a 20 per cent rise in total disbursements in FY25, the total amount is expected to reach about ₹1.06 lakh crore. The company’s primary business segment, vehicle finance, is on track to surpass ₹50,000 crore and could reach about ₹58,000 crore. Its AUM (assets under management) stood at ₹153,718 crore as of March 31, 2024.

Dominant segment

Despite a decline in the vehicle finance segment’s share of total disbursements from 72 per cent in FY22 to 54 per cent in FY24, it is expected to remain the company’s dominant business segment. The share of other key secured segments, such as home loans and loans against property, may increase. Also, the combined share of the new businesses, i.e, consumer and small enterprise loan, SME finance, and secured business & personal loans has increased to 23 per cent of total disbursements in FY24 from about 7 per cent in FY22.

In vehicle finance, which focuses on lending to cars, trucks, two-wheelers, tractors and construction equipment in both new and used segments, the company’s targeted approach seems to be paying off. With roughly 85 per cent of its total branches (1387) in rural areas, the rural segment makes up about 60 per cent of vehicle finance disbursements.

“In this segment, the focus is on the customers in the middle of the pyramid. Our idea has been to lend to the people who use the vehicles for their business purposes or livelihoods. So, these customers are happy to pay the installments. We will continue to focus on this set of customers,” D Arulselvan, President and CFO of the company told businessline.

For eg, in the commercial vehicle segment, about 65 per cent of disbursements are to micro and small enterprises and agri -based customer segments. Also, in the passenger vehicle segment, just over a third of disbursements are to self-employed individuals (not salaried class), while the remaining two-thirds will be to the company’s existing customers, agri and commercial usage customers.

In the vehicle business, used vehicles account for 27 per cent of the portfolio (17 per cent in the overall portfolio) and it is likely to increase to 30 per cent in the coming months as the used vehicle industry has been growing steadily over the years due to increasing prices of new vehicles and higher replacement demand post the pandemic.

New Head Office

Discussing the property recently bought property (at a cost of Rs.735 crore) in Chennai, Arulselvan said the company was working out 4 or 5 locations in Chennai and the management felt the need to bring all under one big corporate or head office building. “It will take 2-3 years to complete the construction. The cost-benefit is likely to start yields after completion,” he added.

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