Good morning, everyone. Welcome to the interaction with management of Cholamandalam Investment and Finance Company Limited. Today we discuss for FY 2026 earnings and management outlook. The senior management is represented by Mr. Vellayan Subbiah, 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 Vellayan for his opening comments, after which we'll take the Q&As.
Thank you, Nischint, for hosting the call, and good morning, everyone. I'm happy to take you through performance for Chola for Q4 FY 2026. First, we'll go through the disbursement growth for the quarter. Chola reported aggregate disbursements of INR 32,913 crores, which represents a 25% year-on-year growth for Q4, which resulted in AUM increasing to INR 2,42,630 crores.
AUM growth remained healthy at 21% as at the end of the quarter, reflecting sustained momentum across the portfolio. Disbursement suggested strong broad-based growth across all major product segments during the quarter. The vehicle finance business reported 36% year-on-year growth in Q4, driven by sustained demand across vehicle categories, with auto AUM increasing 18% year-on-year to INR 1,90,558 crores.
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 AUMs grew 29% year-on-year, with LAP AUM at INR 52,295 crore, which is a 26% growth year-on-year. SME AUM is at INR 9,338 crores, which is a 41% growth. SBPL AUM is at INR 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, with a newly launched gold loan business disbursing INR 1,130 crores in Q4 FY 2026.
Home Loan disbursements saw mild moderation in Q4 due to procedural timing factors, including election-related administrative slowdowns, land record digitization mismatches, and localized lien 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 CSEL AUM increased 4% despite the exit from partnership-led businesses. In terms of profitability, our NIMs improved by 40 basis points year-on-year in Q4, driven by gradual reduction in the company's cost of funds as interest rates softened during the period.
Credit cost before management overlay declined by 20 basis points 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 INR 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 on sectors dependent on global shipping and commodity flows, while core asset quality indicators remain resilient. Return on assets for Q4 FY 2026 stood at 4.1% before the overlay, compared to 3.6% in Q4 FY 2025, while return on equity for the quarter was 23%, underscoring improved profitability. We hold a strong liquidity position with a total liquid asset of INR 21,186 crore, 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 2026, with Tier 1 capital at 14.73%.
Out of the total issuance of INR 2,000 crore CCDs amounting INR 1,370 crores were converted in FY 2026. The balance INR 630 crores of CCDs is expected to be converted in the first half of FY 2027. The board of directors of the company has recommended a final dividend of INR 0.70 per share, which is 35% on the equity share of the company, subject to the approval of the members of the company at the ensuing annual general meeting. This is in addition to the interim dividend of INR 1.30 per share at 65% for the financial year FY 2025-2026 declared by the company on January 31, 2026. Nischint, with that, I'll stop and we'll be happy to take questions from it.
Sure. Yeah, we'll start now. We'll be now start with the question- and -answer session. The first question comes from Kunal Shah of Citi. Kunal, you can unmute and ask your question.
Yeah. Hi. Thanks for taking the question. 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 FY 2027 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 tightened the credit filters or improved the screening out there, how we are incrementally looking at these segments. Yeah.
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. That will help us to improve further improvement in credit cost. In this financial year, we are still holding our growth trajectory between 20%-23%, what we have been committing. We are still hoping that our net credit cost will go down from 1.6% pre-overlay to 1.5%, and our ROTAs should improve then closer to 3.5% pre-tax ROA, which we have been discussing that.
Okay. Got it. 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.
Yeah.
That is actually decide the accuracy of decision taken by us. We are working along with all the trade 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 CSEL CD and Vehicle Finance during the Q4 and which is going to be continued even in the next this financial year.
Okay. That should help the overall credit cost trajectory of 1.5 %-odd.
Yeah, it should help us to get that number.
Okay. No need for any further overlay. This doesn't include any overlay buffer as such. We believe like INR 200 odd crores, which we have done, that is sufficient enough taking into consideration the current dynamics which are there.
Yeah. It is shifted by is a more a precaution, considering will there be any higher credit cost for the settlement. As we talk now, there is no need for any buffer.
Perfect. Yeah. Thank you.
Raghav.
Thank you.
Yeah. Raghav Garg of Ambit, you go next.
Okay. Am I audible?
Yes, yes. Go for it.
Okay. I just want to understand, see, for April 26, you know, these two key OEMs, Tata and Eicher, have reported fairly good growth in their CV volumes. Now should that be taken as a proxy for how the on-ground sentiment is among 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? 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?
Yeah. See, not only commercial vehicle segment, is passenger vehicle also has shown the good number in the month of April. We have got the opportunity to see our number also. Our number with respect to sales, credit, collection, as compared to the April 2025 has been very good. As of now, the on ground, any, you know, we have not seen any change in behavior.
Understood. 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. Absolutely.
Okay.
That is correct.
Okay. My second question is that for FY 2026, can you give me the total recoveries cost? The same number in FY 2025 was INR 441 crores. What was this number for the full year FY 2026? Then I have a follow-up question on this.
Maybe we'll come back, after seeing the numbers and, then you also ask the question.
Okay.
Once we are ready.
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 FY 2027, 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, you know, your thoughts on this.
Yeah. I think you're asking about the collection cost in terms of percentage to the asset. If you see that the collection cost is a part of the total operating expenses. Total operating expenses has been fairly at the same level. It is at 3.1% compared to last year of 3%. Nothing has gone up in the operating expense. 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 the capacity utilization has improved. Also we got the opportunity to get, you know, a resolution through servicing in the current time. Both put together, the collection efficiency has improved.
Another important thing, we have been continuously saying that our stage two has been improving throughout the year, say 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 zero to those who are in 31 - 60 and 61- 90, we are actually good. That's the reason, stage two has come down. Finally, stage three has also improved in last quarter.
Understood. Thank you. Do I have opportunity for one more question?
Please go ahead.
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 INR 5 lakh, INR 6 lakh of exposure per customer. I just wanted to get some sense on what kind of ticket sizes you are doing in gold loan segment. What kind of fees 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 loan NBFCs.
Yeah. If you look at it, our average ticket size for a loan in Q4 has actually come down from when we started it was around INR 3 lakhs, now it has come down to INR 2 lakhs. We are getting more granular in terms of our acquisition strategy. Yes, I think, in gold loan, typically what happens is that customer takes more than one loan, right? Typically, when you look at a total customer exposure, it could anywhere vary between INR 5 lakhs-INR 6 lakhs per customer. I n terms of the average ticket size, at INR 2 lakhs.
Sir, you're saying that even your customer would have around 1.5-2 Loans?
Yeah.
The total exposure would be INR 4 lakhs-INR 5 lakhs.
Yeah.
Okay.
Yeah. I think, you know, as I had mentioned, as we have always been maintaining, our yield also, you know, has been you know, very healthy as compared to our peers.
The ticket size is INR 2 lakh now. It has started with INR 3 lakh, it has come down, and yield has gone up to now 15 yield also.
The yield is also very, very pretty strong in terms of, you know, it's pretty healthy as compared to our competitor. 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.
Sure.
Thank you.
Yeah.
Viral from IIFL Finance.
Hi. Thanks for the opportunity and congrats on a good set of numbers. I had two questions. One is on the CSEL 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. 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 here and ROE outlook for, say, FY 2027 and 2028 in this segment, and whether it will be to what degree and extent ROE accretive? That's my first question, sir.
CSEL now is a has got two businesses. One is unsecured personal loan, business loan, and professional loan, one side. Other side is the CD, mobile lending, and also, D2C is online, in-house fintech. 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. That's, that's the reason, if you take a 2.3% ROE of the quarter four, 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 lending also should improve because of the consumer durable also growing. That is the one thing.
In terms of growth, the disbursement growth has been 39% in quarter four, which is going to be continued because quarter one, quarter two, 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 CSEL both put together unsecured PL, BL and professional and CD gold, CD and digital and mobile put together should be, you know, at least in the quarter four, we are expecting that start hitting 20% asset growth.
That's fine. Understood.
Operating expenses is basically high in the quarter four because CGTMSE insurance we have paid. Now in the this financial year also we are going to pay, which is going to get distributed across all the quarters. This impact of 6% will not be there. It will go down to the level it was, 4.5%. That's how we are expecting that there's going to be improvement from operating expenses as well as the net credit cost, which will help to increase the ROE from 1.6% of this financial year to 3% or more.
Got it, sir. Very clear. Just as a, I would say, extension, to your response, you mentioned that, you have paid premiums for the CGTMSE I have made, in this pool. What percentage of our, the BL over here, will be, covered by this, insurance?
As of now, we have covered around 70% of our assets. Now we'll 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. This will be around INR 10,000 crore-INR 12,000 crore asset, right? In the ex of CD business.
No, it is only VL portfolio that we are going under CGTMSE, and it will be around, you know, INR 3,000 crore-INR 3,500 crore of this.
Yeah. As I mentioned that it actually include PL, BL professional in one side and other side CD, mobile and D2C. The BL part is actually INR 5,000 crore, isn't it? Of that 80% is around-
Right.
Around INR 3,500. Yeah.
Got it, sir. Very clear. Sir, my 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, is this basically across the segments, vehicle finance, and also the home loan LAP. 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? 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 2024 April, 2025 April, we are much lower in the month of April 2026. Even this is almost at par with April to March 2024 and 2025 numbers, and we have not seen much of a deterioration. Normally April, March to April, there is some level of deterioration, but this month, this year it has been better.
Yes, sir.
Second thing, even in the first card NCL numbers are lower than last April.
Got it.
That's where we are.
Got it. This is super clear, sir. Thank you so much and all the very best.
Thank you, Viral
The next question comes from Abhijit, from Motilal Oswal.
Yeah. Thanks, Nischint . Hi, sir. Good morning. Sir, just on the ROE tree, I mean, last two years, I think build also of Cholamandalam has been particularly tough, especially from the vehicle finance side. Last, sir, just mentioned that in April 2026, non-starters have been much lower than what we saw in Aprils of last two years. Just trying to understand, versus ROEs of 2.3%, 2.4% that we've seen the last two years. You'll remember, when we had started these, newer business lines, the whole idea was to get to better ROEs over a period of time. I acknowledge last two years on the NCL line, has been higher.
I mean, when you said that, this year, FY 2027, we should look at a credit cost of 1.5%, just trying to understand which segments, with vehicle being one. CSEL, you'll remember last year we were incurring higher credit costs on that book which was originated through FinTech partnerships. Just trying to understand, I mean, what all levers will we have on the ROE tree, which can lead to an ROE expansion this year or next year?
Uh, this is Arul. Uh, so what will happen-
Actually-
NIMs will hold at same similar levels at around 8%. 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 FY 2027. I am looking at 8% NIMs to hold because of these two combinations. OpEx will be in the range of around 3%-3.1%, 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. You see today we are at 3.3% after considering management overlay of around 9 basis. If you remove our current NCL is 1.6%, even if we do 1.5%, we should be easily at the 3.5% pre-tax total number. Yeah.
Got it. 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 SBPL book that we have that is not something where we can apply SARFAESI. What will be the approach t o ARCs in that business?
Our focus would be to use ARCs wherever we are not able to SARFAESI, which is any loans which are of less than INR 20 lakhs, whether it is from HL or SBPL. You know, these are the two broad businesses. SME, and then ticket sizes are larger. So they will certainly increase SARFAESI. So they may not go for the ARCs in that context.
Got it. Thank you, sir. Last question is for Ravi, sir. Sir, just trying to understand within the vehicle financing book, various sub-segments. I mean, you mentioned earlier Tata Ace 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 you've not seen any impact?
For last three years, we have been going through the problem, either from the geographic point of view or the product point of view. 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 Ace type of vehicle, which is a small commercial vehicle or light commercial vehicle, even heavy commercial vehicle. All segments got impacted and from Q4 onwards it has started improving. Even in the month of April, we see that the demand for the vehicles are still holding. As Balraj mentioned that all the delinquency, you know, with respect to the early default non-starters, with respect across all product segment, things are looking better.
We have been saying that we will gain little bit market share also with the, in the vehicle finance because things are looking better with the last year we said that. It is continued. I'll say that, you know last year when we started, we were having three engine of Chola, LAP, SBPL and HL. They were driving the growth. Now all eight engines are driving. That is what is our comfort level. We are so 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 Deep of Bandhan.
Hello sir. Thank you for the opportunity. Am I audible?
Yes, yes. Go ahead.
Sir, one quick thing. We are at around 6.94x gearing and guiding a growth of around 20%-23%. Any sense or clarity on when will we, you know, raise some capital if needed? I mean, not on the quantum, but any timelines for those? I think we have, I mean, 19.2% is our capital adequacy ratio. How much of this will be, I mean, will we consume some amount of capital for growth this year as well, or our internal approvals will be sufficient? Any clarity, sir, on this part? Si r, 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 7.17x last quarter to 6.94x currently. Sir, any internal policy or any guidance that you would like to give for the gearing ratio?
We follow the capital adequacy ratio, we have given guidance there that if the tier one ratio comes to 13%, we will certainly start looking for equity. In a situation where we are returning a 3.5% pre-tax return and growing less than 20%-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. But stated policies I've already given you.
Okay. Sir, one more question. I understand we are at AA+ positive from ICRA and AA+ stable from all other rating agencies. I mean, sir, any initial talks what they have been saying to, I mean, to take Chola to a different level from AA+. 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?
We are in discussions with them and we will keep evaluating. As you know, it is not like a, you know, given formula that you reach a certain, you know, numbers then they will automatically do this. It's in both a qualitative as well as a quantitative approach to the rating approach. Many of the other competition is getting the AAA leveraging parental support, etc. Unfortunately, we cannot do that because there is not any dependence of any of their parent organizations on Chola for their funding requirements, etc. That being the case, we continue to be AA+ from their end.
Sure, sir, I understand. I mean, the positive trigger is also a qualitative one. Thank you for the inputs, sir. All the best for the next year.
Thank you.
Next is Abhishek from HSBC.
Yeah. Hi, good morning. Just a few questions. First on vehicle loans this year, what is the disbursement and AUM growth that you are looking at?
Vehicle finance we are expecting to continue the good job where we are as of now in quarter four. That is coming to around 15%-20% disbursement growth and around 18% asset growth.
Okay. C onsidering 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 Balraj is committing.
Got it. Got it. Right. The other questions, the FinTech book, how much of it is left to run down now?
INR 300 crore-INR 400 crore there, but this will be little long-term because it will run through the entire year.
Sure, sure.
Beyond one year type of-
Okay, yeah. It's quite negligible that way. Okay.
Yes.
The third thing is in overlay provisions that you have made, have you changed any PDLGD 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 going forward?
No. PDLGD we have not changed. Where if we change PDLGD, then, that is no overlay concept.
Got it.
Yeah. The overlay has been arrived at based on a past experience of similar situation when COVID, when the diesel prices went up and you know how the delinquencies had sort of panned out at that time.
Mm-hmm.
Similar approach we have taken to look at what should be the overlay and arrived at this overlay. There's no change in the PDLGDs.
Got it. Yeah, because some other NBFCs are having to change some of these core assumptions. Nothing like that, right? The ECL model remains the same.
Because, Abhinav, the PDLGD is based on past experience and past data.
Yeah.
I've changed the data for that past period. The past period gives me a PDLGD. There are two options to do it. One-
Right.
...add it to the macro or, add it as an overlay. The macro information available is again citing a much better GDP growth and much better, you know, 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, you know, what should I say? Events that happened post-February to factor in this overlay.
Got it. CGTMSE, NSE, the cost for this quarter would be roughly around INR 40 crores.
Yes. Around INR 35 crore, INR 40 crore.
INR 38 crore. INR 38 crore.
INR 38 crore.
Perfect. Perfect. Perfect. Just one last quick question on HL is, now, that inter quarter movement is because of assignment and upfronting of income or is there something else? No, no.
3.5%.
Assignment income, assignment income is not given credit into that respective business portfolios. That's separate issue. We have not assigned any HL book also incidentally. It's more some other portfolio.
Sorry.
Arulselvan D, this 50 basis point jump.
The income is primarily coming.
SLB.
This is coming from the ARC accounting where ARC amount is shown as income and then the NCL is written. This nets off.
Oh, yeah.
Overall ROA remains same. That's given as a bottom line.
Page number 76 note is there.
Got it.
0.39% is the incurred because of that.
Okay. Got it. All right. Thank you. Those were my questions. All the best. Congratulations for the quarter.
Thank you.
Piran from CLSA, you go next.
Yeah, thanks. Congratulations team on the very strong set of numbers. Firstly, what would it take for Home Loan disbursements to pick up? It's been in this INR 1,800 crore-INR 2,000 crore range for now seven, eight quarters.
The point here is, no, as of now, we maintain a steady growth rate of 23% on the book. We see now this Q1 should be slightly better. Last year, Q3, Q4, we have seen the increased numbers. We crossed INR 2,000 crores also in Q3. We expect this year, we should be clocking in 12%-15% disbursement growth. We made a steady growth on HLM side around 25%+ .
Sir, why has it been lagging? Like, what will change next year for growth to pick up to 15%, if I ask it that way?
Yeah. This is basically, you know, when we started disbursement four years back, our penetration was only in South. All the scale-up, since the last three years have come to pan-India presence. The branches we have added has started kicking in value. The proportion of South is continuously coming down, and the other areas of India we are managing it good. We see the incremental business coming from other locations in terms of productivity hike, and also the branches are getting mature. Next, next year is the year where our disbursement will scale up, the efficiency will go up, and we'll maintain the ROA 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 completing the documentation since the election because there are two states in the South elections are going on. That has actually reduced the both in disbursement of LAP and HL. That is not impacting the overall asset growth. We are quite confident that we will be clocking 25%+ asset growth in the HL and LAP and as well as, there are two more mortgage businesses we are having, SBPL and SME.
There the growth will be higher than 30%. Put together the mortgage business growth are going to drive the overall growth of the company. New businesses like CSEL, CD, Gold are also supporting that. That's the reason we are saying that we are quite comfortable in, you know, holding our commitment of growth of 20% to 23% for a company level.
Understood. Just secondly on vehicle finance, 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?
There are two types of customers. One is the, and especially for the heavy commercial vehicle segment alone. One is that the commercial vehicle segment in our business is only 5%-7%. It is a very small percentage. Rest of the businesses are small commercial vehicle, light commercial vehicle, passenger car, construction equipment where the fuel doesn't 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 6,000 km and fuel efficiency km per liter. They will have to pay by 2,000 L.
If the diesel prices goes up by INR 20, which is 20% or maybe slightly higher than that, 25%, they will have to spend INR 50,000 extra. Total income after paying all kind of thing in the long-haul transportation is INR 1 lakh. That INR 1 lakh, even after 25% goes up, they will actually have a saving of INR 50,000. That will impact their standard of living definitely, it doesn't impact the EMI payment and other repayment. That's one. That is applicable for long-haul transporter. Long-haul transporters are fleet operator. We are into the SRTO who are operating within the city or within the state. Passing on the freight, which actually, you know, increase diesel prices is easy for them.
Those who are working under contract, you know, large fleet operators with the contractor or load provider, for them it is not easy immediately. What we see that actually because of the heavy commercial vehicle portions are very small for us and also more are SRTO. 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, yeah, easy for everyone to pass on those price.
Sir, one fundamental question. Why will fuel price not impact LCV operators? Is fuel cost a smaller proportion of the revenue than for heavy-
They are not traveling. They are not running 6,000 km. Their run is small. A small yield they run. Also market load operator, they take load from the open market and they pass on it.
Understood.
Daily pricing. It's like a daily pricing, Piran.
It is a daily pricing. It is not a fixed pricing which you have to work out a particular way. Sir?
Yeah, no. In heavies the buyer of kind of logistics has much more clout, Piran. Basically.
Okay.
It's the dealing with vendors predominantly.
Okay, fair. Just secondly, 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? For example, if I am shipping iPhones and my, 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. There'll be many other sectors where this would lead to some sort of elasticity of demand. 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. If demand is there, freight cannot go up, isn't it? 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, you know, demand. It is actually more the, their inflation.
I think Piran's question is on end segments, right?
Yeah.
I think, Piran, your answer, Piran, actually your analyst colleagues in other sectors will be able to give you the best answer. Basically the data point you need, Piran, is what is logistics cost as a percentage of the overall revenue associated with the product, right?
Correct.
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. Right, and I think you, I mean, your analyst colleague will easily be able to give you that breakdown. That analysis is fairly simply available as to what is logistics cost as a percentage of overall cost of the sector. I think broadly we know, right? That the heavier infrastructure sectors have a higher logistics cost as a percentage of cost or revenue.
Understood. Okay, I'll take it offline for further details. Thanks. Congrats on the quarter once again.
Thanks. Thank you.
Thank you. We have a large participant list for questions. My suggestion is just to keep, you know, keep it brief and maybe one or two questions. Shubhranshu from PhillipCapital, you go next.
Hi. Thanks, Piran, for Morning, commissioners. I'll ask two, three questions. The first one is, the growth number that you gave, that's on the disbursement. If you can split this number into business-wise. I think you've already given for vehicle finance. For rest of the businesses, if you can split this growth for 2027, what kind of growth we can look at for each of the businesses? Second is, how many people do we deploy in collections? If, again, you can split that business-wise. Thanks.
Shubhranshu, I can't give you business-wise this data. You know, we have given lot of data.
Just the total number of people in collection, sir.
The number of people we can give you that is around 30,000 people we have now on the collections. That is there. Independently each business-wise very difficult to share because that's not the problem.
That's fine, sir. That's fine. I'll take it offline. Thanks. The first part of the question, sir, the growth numbers.
Growth numbers also we have given you AUM growth only. AUM growth we have said it will be between 20%-23% as we have talked about earlier. Independently, I think vehicle finance, we have said 18% growth. Then LAP and HL will be, you know, growing in the about 25%-30% level. The rest of the business which are new because the base is low will actually clock a larger, you know, percentage, but that is the overall number would average out to the 20%-23% I spoke about.
Right, sir. 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 five, six years, sir. Earlier it used to clock anywhere between 19%-22% and this is a huge spike. Any reason it is here or we are likely to see this come off? If you can elaborate on that, it'll be great, sir. Thanks.
No, they have been doing their book quite, you know, decent growth and, you know, cost on the credit also low. That's good and we are quite happy about that and we would like to continue that.
It'll stay around 30%?
Yeah.
Right. Right. Understood, sir. Thank you so much. It was great.
Thank you.
And, uh-
For having me.
Best of luck for the next quarter.
Thank you.
Thanks. Vijay from Investor Table next.
Thanks, Nischint. My question is on branch addition. What are the plans to add branches in vehicle, home equity and Home Loans in FY 2027?
Home loan, Aman.
The point here is we already have the vehicle finance branches. The only for us we are is the extension of putting manpower. We are planning around 60 new branches in Q1 and Q2, 40. 100 branches in Home Loan will be next financial year.
These will be shared branches of vehicle finance. Unique branches would be the gold loan branches.
Yes.
Which should be in the range of around INR 300+.
Yeah. Will always be part of the VF.
Yeah. All the other businesses would mostly be in the vehicle finance branches. Vehicle finance branch by itself would go up by around 100.
For the other divisions, it's deployment of manpower in the branches which will create the new branch.
Sure.
INR 100 in LAP.
INR 100 in VF and then probably 300 in gold. That will be the branch addition.
No, no. INR 100.
INR 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 and Suresh is they will start operating out of existing VF branches where they are currently not operating.
The count would be INR 100 in HL and INR 100 in LAP.
INR 100 in HL. Yeah. Don't add up all the numbers.
Okay.
Number of branches for Chola. That's what I was trying to say.
Sure. Thank you, sir. That's it from us.
Thank you.
Well, just a clarification. Gold branches addition is INR 300. What is the current base?
Gold loan is starting INR 360 more. Today we are at INR 120. INR 120 into INR 480. HL will increase INR 100. LAP will increase INR 100. It will be increased INR 49.
Since only retail and CV are also likely to increase 100 branches more every year.
Right. Great.
This time is going to go up by 20.
Gold tends to be exclusive, right? I mean, there is no sharing of branches for gold.
Gold alone will be exclusive. Rest of them will all be-
All of them.
Oh, perfect. The next question comes from Shreepal of Equirus. Shreepal, you can unmute and ask your question.
Congrats on a good quarter. My question was on vehicle finance front. Within that, HCV has seen a very strong growth this quarter. Are we seeing similar trends in April as well? How is the competition from banks in this particular segment, especially on the newer side?
Sir, as of now and 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 LCV. Across the product we have seen and we have been able to increase our market share.
Okay. On the competition from bank, if you could give some color there.
As of now, since we have grown.
We have not seen that actually.
You have not seen.
It is similar level at where it was.
Okay. Okay, got it. Is there the trend in the newer segment as well? Because, I mean PSU banks were heard, you know, they've become very aggressive in that particular segment. We are not seeing any impact for us.
Only passenger. Yes. They are into passenger.
We are not seeing any significant shift in the competition behavior in the last four to five months. In April also there has not been any change.
Got it. Thank you. Thank you for answering my question, and good luck for the next quarter.
Apparently as per CMI data, freight rates have already gone up in April versus March. Apparently, you know, some of the data suggests 10 %+ month-on-month growth. Is this something which has to do with demand or is it something, you know, in anticipation of fuel prices?
Demand also. Prices as of now, diesel prices are same level.
Demand has been strong in April.
Sorry, what?
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 is, cannot be reason for increasing the freight.
Got it. Yes. 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. I think, yeah, that's it. We are done. Thank you very much.
Thank you. Thank you.
Thanks management for giving us an opportunity to host the call. Okay. We have a question from Harshit. Can we take that? If.
Yeah. Okay.
Yeah, yeah. Yeah. Harshit, you can ask your question. Yeah.
Sure. Sir, the question is on the cost growth itself. When we look at FY 2026, employee cost was around 27% YoY. Going forward, obviously we want to invest in gold loan and we want to invest in newer businesses. How should we look at the overall cost growth versus the AUM growth? Yeah, I think on net basis, should it now start tracking AUM growth or we should start getting some operating leverage out there?
Okay. I think it will take another year or so to get any operating leverage because we are adding new branches for most of the businesses. We just spoke about it.
Uh-huh.
We will still continue to hold it at the 3% overall to the average assets. That's what we are. Sometimes we are actually higher than 3.9%. I think we should work at that. Right now, I wouldn't want to factor in any targets.
Of course. Got it. The idea was to just check because given in gold loans, assumption was that typically the break-even periods are shorter compared to non-gold loan businesses.
There's large amount of capital commitment as we spoke. These are exclusive branches, and then people have to be recruited. Unlike vehicle finance, it will not be people who are, you know, new or raw can be recruited. We need to bring in experienced people from different gold loan systems, etc. First of all, there are other initiatives on the IT side, which is on AI side, which is also bringing in larger costs.
Got it.
Let's not count too many ahead of what we are.
Understood, sir. Perfect.
Thank you.
We'll take the last question from Bunty Chawla.
Yeah.
Yeah, thank you for the opportunity. Am I audible?
Yeah, go ahead.
Yeah, definitely.
Thank you. As we have seen, new business part or CSEL, 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. Growth, we are very much confident in vehicle financing. Already we, in terms of West Asia crisis, if you're seeing, you are seeing already we have overlay of INR 200 crore on the credit cost policy.
We are still guiding for credit cost as a whole from 1.6%-1.4%. If we go with the history, we have been in the range of 1%-1.4%. What still getting us to still give a credit cost guidance of just 1.45%, we can easily touch 1.4% with respect to history? 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, the 1.5% is the, you know, idea for this year. From 1.5%, if we get it, then again next year we have to reduce it to 1.4%. Every year we have to improve upon. We don't want to take more target from you all. We have to achieve every year. Let us see that how much we can do this year. Based on that, we will try our level best to do the, you know, across the future. CSEL has started just improving. Another thing is that we need to understand the high yield business, which is CSEL, CD, then digital as well as mobile. All are having little higher net credit cost by design.
If they are growing, then that higher credit cost also will be there. At the same time, mortgage businesses are having a lower credit cost. Then we have vehicle finance, which is an average. All three segment we need to look into it and then arrive at a actual credit cost which is going to be standard for us. Like in the past it used to be 1%-1.2%. We need to define that.
That can be defined within next 1.5 years or two years down the line once all these businesses are set. As I mentioned, all these new businesses started doing well. We see work for another two years, we will come to the conclusion that what would be our future ROA and what would be our future NCL. As of now, let us actually hold it at a 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. Done. Thank you.
Yeah. 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.