Synopsis: Cholamandalam Investment and Finance Company reported a 46% jump in standalone profit after tax to Rs. 1,654 crore for Q1 FY27, as assets under management grew 23% year-on-year to Rs. 2,54,392 crore.
India’s non-banking financial sector continues to see healthy credit growth across vehicle finance, home loans, and SME lending, supported by resilient domestic demand even as funding costs stay elevated. Against this backdrop, Chola Finance’s latest quarterly numbers stand out for both the pace of growth and asset quality trends.
Cholamandalam Investment and Finance shares last traded around Rs 1,760.70, down 1.37% for the day, against a 52-week high of Rs 1,875.00 and a 52-week low of Rs 1,299.40, giving the company a market capitalization of approximately Rs 1,50,102 crore.
What’s the News?
Cholamandalam Investment and Finance Company, part of the Murugappa Group, reported standalone profit before tax of Rs. 2,220.49 crore for the quarter ended June 30, 2026, up 45% from Rs. 1,529.64 crore in the same quarter last year.
Standalone profit after tax came in at Rs. 1,653.59 crore, a 46% increase from Rs. 1,135.91 crore a year earlier, while diluted earnings per share rose to Rs. 19.36 from Rs. 13.47, an increase of 43.8% year-on-year.
Total income for the quarter grew to Rs. 8,932.95 crore from Rs. 7,330.78 crore, driven primarily by interest income of Rs. 8,039.92 crore, up from Rs. 6,650.07 crore, alongside a rise in fee and commission income to Rs. 580.06 crore from Rs. 418.24 crore.
On a consolidated basis, profit before tax stood at Rs. 2,223.56 crore against Rs. 1,532.00 crore a year ago, while consolidated profit after tax rose to Rs. 1,656.22 crore from Rs. 1,137.83 crore, broadly in line with the standalone performance.
Aggregate disbursements for Q1 FY27 rose 22% year-on-year to Rs. 29,612 crore, while total assets under management crossed Rs. 2,54,392 crore, up 23% from Rs. 2,07,663 crore as of June 30, 2025.
The Board also approved raising up to Rs. 55,000 crore through secured and unsecured non-convertible debentures in one or more tranches on a private placement basis, with disclosure details to follow at the time of allotment.
Financial & Business Analysis
The approved Rs. 55,000 crore NCD issuance gives Chola Finance a large funding runway to support disbursement growth across its lending businesses over coming quarters, without needing to return to markets frequently for incremental capital.
Net income, calculated as total income less finance costs, grew 28% year-on-year to Rs. 4,930 crore, comfortably ahead of the 22% growth in total income, indicating that funding cost increases have not fully eroded the company’s spread on lending.
Loan losses grew a modest 5% year-on-year to Rs. 922 crore even as the loan book expanded 23%, suggesting credit costs as a proportion of assets are trending favourably despite the sharp scale-up in disbursements across segments.
Segment-wise, Vehicle Finance remains the largest contributor with assets of Rs. 1,24,131.35 crore, followed by Loan Against Property at Rs. 46,355.50 crore and Home Loans at Rs. 23,416.40 crore, reflecting a diversified book across secured lending categories.
Return on assets before tax stood at 3.7% for the quarter, while return on equity came in at 21.2%, both metrics pointing to efficient capital utilisation even as the company continues to expand its balance sheet at a rapid pace.
The company’s net worth increased to Rs. 32,078.39 crore as of June 30, 2026, from Rs. 24,714.96 crore a year earlier, aided partly by the conversion of compulsorily convertible debentures into equity shares during the period.
On asset quality, gross Stage 3 assets stood at 3.29% of gross loans as of June 2026, up marginally from 3.05% in March 2026 but broadly stable versus 3.16% a year earlier, while the provision coverage ratio on Stage 3 assets improved to 45.73% from 43.72% in the year-ago quarter.
Gross NPA under RBI norms was at 4.50% as of June 2026 compared with 4.36% in March 2026, while net NPA stood at 2.95% against 2.87% in the preceding quarter, indicating a modest sequential uptick that will be worth monitoring in subsequent quarters.
The company’s capital adequacy ratio stood at 19.81% as of June 30, 2026, well above the regulatory requirement of 15%, with Common Equity Tier-I capital at 14.52%, providing a comfortable cushion to absorb further balance sheet growth.
Liquidity remained strong, with the company holding a cash balance of Rs. 22,765 crore as of June 2026, including high-quality liquid assets of Rs. 7,614.93 crore, and a total liquidity position of Rs. 23,984 crore including undrawn sanctioned lines.
Industry & Strategic Analysis
Vehicle Finance disbursements grew 19% year-on-year to Rs. 16,503 crore in the quarter, a comparatively moderate pace relative to other segments, reflecting the more mature and competitive nature of this business line within the company’s portfolio.
Newer growth engines showed sharper momentum, with Secured Business and Personal Loans growing disbursements 40% year-on-year and SME loans growing 39%, indicating the company continues to diversify away from its traditional vehicle finance base toward higher-growth segments.
The Gold Loan business, still in a scale-up phase, disbursed Rs. 754 crore during the quarter with an AUM of Rs. 2,143 crore, operating through 171 dedicated branches, representing an emerging growth avenue rather than a near-term earnings driver.
Co-lending arrangements remain a meaningful part of the funding and origination strategy, with the company acting as an originator on one arrangement and as a partner on four others, collectively covering vehicle finance and personal loan portfolios worth over Rs. 10,000 crore in outstanding loans.
The company also continued its loan assignment activity, transferring Rs. 1,991.80 crore of loans not in default during the quarter, a tool that helps manage balance sheet growth and capital consumption while retaining a 10% beneficial economic interest in the assigned pool.
Of the Rs. 2,000 crore compulsorily convertible debentures issued in 2023, Rs. 1,370 crore was converted into equity during FY26, with a further Rs. 200 crore converted in July 2026 and the remaining Rs. 430 crore scheduled for conversion in October 2026, steadily strengthening the equity base.
The upcoming Rs. 55,000 crore NCD programme, alongside continued CCD conversions, positions the company to fund its ambitious disbursement growth across vehicle finance, property loans, and newer segments like gold loans and SME lending through FY27 without near-term capital constraints.
Company Overview
Cholamandalam Investment and Finance Company, part of the Murugappa Group, is a diversified non-banking financial company offering vehicle finance, loans against property, home loans, SME loans, consumer and small enterprise loans, secured business and personal loans, and gold loans. The company operates through an extensive branch network across India, with subsidiaries including Cholamandalam Securities and Cholamandalam Leasing.
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