Cholamandalam Investment Q4 Review - Beefing-Up Buffer To Cushion Earnings: ICICI Securities

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ICICI Securities Report

1. Cholamandalam Investment and Finance Company Ltd.’s Q4 FY21 earnings surprised on few counts:
2. Despite retracement in collection efficiency, stage-II/III went up QoQ (crossing 10% mark); however restructuring of ~2% was categorised as stage-II assets.
3. Its stance of creating further Covid-19 buffer of Rs 3.5 billion (against its Q3 FY21 guidance of consuming the buffer).
4. Elevated employee cost of Rs 2.7 billion (versus Rs 1.6 billion quarterly run-rate).

What helped offset this drag was sustained business momentum (14% assets under management growth) and consistently declining funding cost.

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