Good evening, everyone. I am happy to take you thr ough our perf o rmance for Q2 FY 2027. We continue to witness strong momentum across our lending businesses during the quarter, with broad-based growth across vehicle finance, SME, and consumer finance. Aggregate disbursements grew by 47% year-on-year to INR 35,872 crore, reflecting healthy demand conditions, execution strength, and continued expansion of our distribution franchise. This translated into an AUM of INR 268,000 crore, registering a growth of 25% year-on-year. In vehicle finance, industry volumes remained robust across key segments, supported by replacement demand, improving economic activity, and healthy freight utilization. We are particularly pleased that Chola continued to grow materially ahead of the industry, driven by market share gains, deep customer engagement, strong dealer relationships, and disciplined execution on the ground.
Vehicle finance disbursements grew by 31% year-on-year to INR 17,800 crore, resulting in an AUM of INR 129,787 crore, a growth of 21% year-on-year. The secured SME finance business across all key product lines, including LAP, SME, and SBPL, continued its strong growth trajectory for the quarter, with disbursements increasing by 42% year-on-year to INR 9,345 crore. This growth was driven by a focused market penetration strategy, strong on-ground execution, and deep engagement with channel partners. We witnessed consistent growth across all product lines, resulting in an overall AUM growth of 27% year-on-year to INR 72,356 crore, with LAP at INR 57,447 crore, a growth of 24%, SME at INR 10,943 crore, a growth of 45%, and SBPL at INR 3,966 crore, a growth of 35%. This reflects both the scalability of the franchise and increasing acceptance of our offerings amongst customers.
Our consumer loans business, comprising housing loans, CSEL, and gold loans, continued to scale rapidly during the quarter, driven by our expansion of our distribution footprint and stronger relationships with channel partners. CSEL and consumer durable financing continued their momentum, leveraging our digital lending platforms. These businesses are playing an increasingly important role in diversifying our portfolio while creating a strong runway for sustainable future growth. Consumer loan disbursements grew by 103% year-on-year to INR 8,726 crore, resulting in an AUM of INR 45,902 crore, up 32% year-on-year. Growth was broad based across product segments, with housing loans, CSEL, and gold loans registering disbursement growth of 43%, 103%, and 320% respectively. AUM and home loans stood at INR 25,240 crore, CSEL at INR 17,216 crore, and gold loans at INR 3,446 crore.
The strong business momentum across these segments reflects our ability to leverage multiple distribution channels, deepen customer engagement, and address a wide spectrum of retail credit needs. We maintained NIMs at healthy levels despite a volatile interest rate environment. Our strong portfolio performance led to a reduction in credit cost by 37 basis points. Consequently, our profitability improved, with margins, our PBT ROA expanding by 40 basis points year-on-year. This translated into a stronger return profile, with ROE improving to 19.4% compared to 18.1% a year ago. Gross stage three improved to 3.25% in September 2026, from 3.29% in June 2026. GNPA, as per RBI norms, improved to 4.4% in September 2026 from 4.5% in June 2026. The company continues to maintain a strong liquidity and capital position with total liquid assets of INR 21,974 crore, including undrawn sanction credit lines.
As of September 2026, the capital adequacy ratio stood at 20.62%, with tier one capital at 16.02%. As on September 2026, the conversion of CCDs into equity shares were completed. Given the strong growth momentum across our businesses, the board has approved a proposal to raise up to INR 5,000 crore of capital subject to shareholder and regulatory approvals. The proposed fund raise will strengthen our capital base and provide adequate flexibility to support our future growth aspirations while maintaining healthy capital adequacy. Nischint, thanks so much. I will stop with that. We will be happy to turn it over to all of you for questions.
Thanks, Vellayan. We start with Viral Shah of IIFL. Viral, you can ask your question.
Hi, Viral.
Viral, you can now ask a question.
Hello. Yeah, am I audible now?
Yes. Yes.
Yeah. First of all, congrats on a great set of numbers. I would like to first of all congratulate, I would say, for the delivery and the kind of, I would say, execution that all of you have done over the last, I would say, decade and a half, through the diversification scale-up of ROA accretive segments. Vellayan, if you can throw some light in terms of, say, the capital that we are planning to raise. What would be the strategy for us, say, over the next three years? Are there any new subsegments that we plan to enter, and basically also some timing on that?
I think in terms of subsegments, we've just added gold. Gold continues to grow. First off, the capital raise is just something that we have said that we will do in a situation like this. Our last capital raise was now a few years ago. We continue to basically look at what we need to do to strengthen CAR and strengthen our balance sheet. It's more from that perspective that we want to strengthen, Viral. The growth will continue. Though we do continue to explore, I do think we have a pretty full set of segments right now, and a lot of the growth will go into existing segments itself, right? Like you saw, gold loans is growing fast. Our consumer durables business is growing fast. Even our core businesses, right? Vehicle finance continues to have 21% AUM growth.
Across the businesses, we see fairly healthy growth coming up. A lot of it is about how we share, how we shore up our capital to be able to handle that growth effectively.
Right. Just as a clarification, when you mean to say, of course, this is more from a, say, medium-term perspective is what you are referring to, right? Nothing kind of immediate in terms of the capital raising plans.
The capital raise, we will do. It depends, obviously, on market conditions. We will be conscious of market conditions, but we will do it in the near to medium term, depending on market conditions.
On the related point, Vellayan, I think you also rightfully pointed out the consumer business that has been kind of scaling up now. It is almost three quarters wherein now we are seeing that the PBT ROTA is now consistently crossing, say, 3%-3.5% kind of a mark. Still, I think this is not the optimal profitability for the subsegment given that there are various other subsegments that are folded into this segment that we see over here. Can you or rather would you like to throw some light in terms of some of the subsegments, consumer durable, mobile, PL, and what could be the, say, optimal profitability looking like over here from a medium-term perspective?
Yeah.
I think.
Go ahead.
Yeah. No, the CSEL as of now has two businesses, unsecured business loan and CD and digital lending. The CD, mobile, and digital lending. These are the two businesses which is being headed by Sucheth Bharathan and Vijay Kini. This business, we need to basically start showing up separately, probably from the next month, once we reach to some a good size. When you see that, by the time you will see that, both the businesses are doing very well in terms of ROA. They started now delivering close to 3.6%. Together, if you see that, then they can definitely deliver more than 4% pretax ROA. They should deliver, and as soon as possible, they should deliver.
Here, the major benefit is going to come from the net credit cost going to go down and a little bit operating expense is going to go down, which is going to be a purely unsecured business point of view. As far as the consumer durable and digital lending is concerned, we have fairly reached to the optimal number. But since it has not been shared, we are not opening the numbers. But together it can go up to 4%, definitely. Pretax.
Got it. No, got it. That is very clear. Just last question, sir, if I may. Now, at the halfway mark for the fiscal year, we are standing at 25% kind of growth, especially with now also the scale-up of the longer tenor mortgage book. Would you want to revise your growth guidance for the year?
No, we are not revising, but we also would like to mention that the quarter 3, quarter 4 have been always better than quarter 1 and quarter 2. We have to see that how much better it come. But definitely we would like to continue to deliver what we are delivering. So one is the growth, which is like 25%, and one is the net credit cost, which is 1.4%. This much though we wanted to deliver in the beginning itself for the full year. Now, since it has been achieved in the half year itself, we don't want to further take a much bigger target. But having said that, better is possible because of the quarter 3, quarter 4.
Got it. Thank you very much. I will come back in the queue if at all any.
Thank you. Thanks. Kunal Shah from Citi. Kunal, your line is already unmuted.
Yes. Hi. Congratulations. Good set of numbers. Firstly, in terms of the credit quality outlook, this qua rter we have managed it pretty well in terms of GS2, GS3. We have almost 17% exposure to Maharashtra as well as Karnataka. Given this entire drought concern, how do we look at the vehicle finance credit cost in particular and the other segments too? Because few of the players have indicated the buildup stress in few of the geographies due to drought. Would want to have your outlook and your assessment of the situation currently at the ground level.
See, the drought-prone area, Vidarbha, Malwa, coastal Karnataka, and some part of Madhya Pradesh have been always a little bit painful in the past as well for us. Therefore, we always kept our concentration slightly lower in this market, knowingly that this market has actually given this kind of stress in the past also. Another thing is that the tractor financing is more affected by the drought, which has not been done for last three years in a big way. Our penetration in tractor has come down over the last four years, five years. Especially in this market, it has come down significantly. Both put together, we don't see much problem. Also our book is totally diversified with respect to the product within the vehicle plan as it is distributed within the geography, if you see that, we have multiple geography.
Having said that, the concerns mentioned by other finance companies also are being considered, and we have evaluated that, but we don't see that kind of problem as of now. But as and when we will see any problem, we will let you know in future.
Sure. We would be pretty confident with respect to the overall asset quality. Generally, second half is any which ways better than first half.
As of now, we are confident with the second half number better than first half. That is what normally we have seen in the past, and we do not want to change our target. Whatever target we are given in the past, we will hold it as it is.
Sure. Second question is on home loan and LAP disbursements in particular, strong uptick both in terms of the sequential momentum as well as the year-on-year growth. Home loan from a low base has again gone up, like LAP also compared to two odd percent disbursement growth, we are now almost 39 odd percent, 40 odd percent. You indicated in terms of the geographical expansion, but what are the other things which are really driving it and the sustainability of the same, if we have to look at it, will this to be a major contributing factor to the growth as well going forward, apart from the new businesses and the continued momentum on the vehicle side?
We mentioned last quarter also that home loan and LAP is also growing, but we have done some technical correction in terms of aligning our disbursement with asset recognition. Therefore, the disbursement in HL and LAP and little bit in SME and SBPL were not appearing last quarter, but actually they were in the same level. Slightly Q2 is better than the Q1 for across all businesses because last year Q2, the base was smaller for across all businesses. To that extent, there is no difference in the performance of LAP and HL with respect to Q1 to Q2. Having said that, the benefit coming because they are consistently keeping their delinquency low and also what they expanded last two, three years, there the productivity gain has come. As we mentioned last time, last year was full of changes in terms of government norm, in terms of dis.
SRO.
SRO chain. Last year we were moving slow. Now, we have achieved goal in terms of completing all the things within the specific timeline and completing the disbursement. The disbursement has started appearing in a better way.
The question was, say, in home loan, almost INR 1,800 crore of disbursements in Q1 getting to INR 2,400 crore. In LAP, also from INR 4,800 crore now getting almost towards INR 6,400 crore, INR 6,500 crore. These are now more sustainable numbers, maybe what we saw in Q2 and the growth over and above that.
If you see that still majority of their business is concentrated in South as compared to rest of the country. They are expanding in the rest of the country as well. Around 40% business is coming from South and 60% business is coming from Northeast and West because of the number of branches available in rest of the country. Therefore, the scope for both the businesses and also for SBPL and SME, all the mortgage businesses out of South is still pending to be penetrated. We are hoping that within one to two years' time, the distribution of all the zone will start coming equal, and by the time they will reach obviously at a better number than what they are doing.
That will continue to happen, and therefore the growth, what we are seeing, we are hoping that this will continue for some more years.
Okay.
[Valued], yes.
Thanks. Yeah, got it. Yeah. That answers the question. Yeah. Thank you.
Thanks. Next we have Abhijit from Motilal.
Yeah, thanks, Nischint. Congratulations on a good quarter, and thanks for taking my questions. Maybe, sir, first thing on the vehicle segment, while you have already articulated that the second half seasonally is better than the first half, but except tractors, are there any segments within vehicle which are vulnerable to droughts? The second question, again, a related one here, in vehicle only is that, we have already seen Navratri, so if you could give some sense around the festive season. I am asking this because, last year, the second half was a little heavy in terms of some pent-up that had built in. So how are we looking at the second half in vehicle finance this year?
We got the opportunity to see how October is actually going through. So we have seen that October numbers are looking much better. As of now, October numbers as compared to last year, October, the growth is actually around 18%-20%.
We'll be at 18%. We'll be growing on a disbursement of around 18% over last October. This year, the advantage is that last year, the festival season was confined to only one month, that is October. We are getting two months, October and November. We expect that same growth. Last year, November disbursement was very subdued. Looks like we'll almost hit the same October number next month also. We are looking at almost
20%.
20%-22% growth in Q2 over last year.
Q3.
Q3 over last year.
That is the growth point of view. It looks like the momentum in terms of growth is continued. No need to worry about what happened last year in terms of base. Coming to the point what you're mentioning, one is the tractor, and second is the small ticket used vehicle. These are the two are mostly sold in the small towns and especially the places where the cash flows are not consistent. Therefore, those vehicles are only going to get impacted, and therefore we have been cautioned in terms of those markets with respect to the disbursement. As of now, I'm saying that this whole thing about the El Niño or drought, we have seen that some markets are actually very good in terms of the rains, and still the rains are going on. The deficit is continuously getting reduced.
We need to wait and watch to see what is the impact going to come. It will be very clear only after maybe December.
Got it. Got it, Ravi, sir. What would you say about this MSME segment? Is there some cash flow mismatches that you are seeing already in this segment, or this segment is also holding up well till now?
In terms of MSME, we are financing loan against property, we are financing SBPL, we are giving unsecured business loan, and also we are giving the SME term loan. Across the businesses, we see that the delinquencies are c oming down. In only small market, we have seen that the loan below INR 5 lakh secured loan is slightly going through tough time, which we have seen in the past itself. That has also started improving. MSME for our business is mostly the secured loan.
Got it, sir. Last question for Arul, sir. Sir, given that we've already seen one repo rate hike, and there are more expected, just trying to understand what is the sensitivity of our cost of borrowings and margins to, let's say, a 50 basis points hike in repo rate. The other thing is, sir, capital raise that we have taken board approval for today. In the past, we used to do it much closer when the tier one used to be lower. Is there a thought process now that going forward, capital raises at Chola Finance will start happening at a lower leverage than what we used to do in the past?
I think up to 50 basis points movement in interest cost during the second half should move the overall cost of funds year-on-year by around 15 to 20 basis points. If you look at it, currently, our cost of funds is still lower as compared to last year, because last year, the first half was high and second half was low. This year it will reverse the trend, and we will have a first half low and second half being high. But still, I think around 25% of my borrowing is repo linked and 25% is linked to other benchmarks. These two are vulnerable for rate movements if persistent interest rate hikes occur. The 50%, which is on fixed rate, which is with banks or MCLR linked. MCLR has not moved up much, but it will also start tending to move up.
This will not, in my opinion, impact largely this year. It will more impact for the next year. We capital raised, we have taken an enabling resolution. It will wait and watch, and accordingly, at other point in time within the next six months to nine months, we will raise this capital depending on the pricing in the market, et cetera. We are in early stages, more enabling resolution item.
Got it, sir. This is useful. Thank you so much, and I wish you and your team the very best.
Thank you.
Thank you.
Hey, sorry, just one clarification, Arul. Did you say 10 to 15 basis points rise in cost of funds for the entire year or for the second half?
For the entire year.
Okay, so second half could be slightly higher.
Second half will be higher, which will take the year-on-year rate by 15 basis points.
Got it. I think t hat's clear. Next, we have Abhishek from HSBC.
Hello.
Yeah.
Yeah. Am I audible?
Yes.
Yeah. Hi, good afternoon, and thanks for taking my question. The first question is on OpEx. There has been quite a bit of jump in branches, employees, all of that. And probably that has led to a jump in the employee cost as well. Is this a run rate now at roughly INR 1,400 crore? This should be a baseline, or is there any one-off here and the baseline can be lower? I'm talking about employee OpEx in particular.
No, employee OpEx, you are seeing that line. It has changed because we have moved a lot of people in from our outsourcing entity too. Now we have put everybody in. If you recall, a year or so back, we moved part of them. We have done everybody into the main company itself. That is why you see the salary cost being high compared to last year. But you see the same amount or similar amount of reduction in the outsourced cost, which you will see that there is almost like a INR 100 crore drop as compared to UN instead of volume, which is absolute value. There should have been a much higher number on those parts, which has been now moved into the salary part. Overall, OpEx is at the same 3.1%, which is where we have always sort of said our OpEx will trend to.
Okay. If I look at the overall OpEx, also on a QOQ basis, there is a 10% increase. So, what is that about? Because I can understand the intra segment.
Yeah, I will explain that. There are two reasons. One is, because we had a salary, where all of our salaries get repriced or we issue our annual increments in second quarter, actually in July. So you have the full impact of this salary cost coming through. The other one is, we also do our annual business meet. That cost has also come into the. Because, actually, we took everybody to Australia, so that cost has been. That is a one-time cost, but the salary cost will continue.
How much would the one-time cost be so that we can know the actual
That can't be shared, Abhishek. Thank you.
Okay. I hope you enjoyed, though. The other question is, on yield
Only thing, Abhishek, I.
Yeah.
Only one thing which I would like to mention from the investor presentation, page number 18. Quarter 1, 2026 was 2.9%, and it went up to 3.1%. As of now, it has gone up by 20 basis points. Last year, also, one to two. This time, it has gone up by 10 basis points. So it is the benefit for us, and that is because of the operating expenses coming down in vehicle finance, home loan against property. The old businesses, they are actually slightly better.
Right.
Some of the businesses are doing better. Especially vehicle has actually come down significantly.
3.332?
In spite of we are expanding into gold, CD, and other businesses, the vehicle has released something. So now, slowly, we start seeing some release happening.
Okay.
Hopefully, we will continue to do that and try to come down a little bit. As I mentioned, for some time, we will be at 3%-3.1% level.
Right.
But in two years time, or two to three years time, we would like to take it down to 2.8%.
Got it. So 3.1% should not be breached, right? So 3%- 3.1% for the next half is also something you see yourself achieving.
For some time, it goes to 3.2%, also should not say like that, but it will be very close to the range. But our endeavor is to reduce it.
Got it. I think the second question is on yield. So if I see your aggregate yield that you've disclosed, 14.9%- 14.6%, that is a 30 basis points drop. But if I look at your individual segment yields, there, most of the segments, except maybe vehicle or something, the yields have increased. So why is this? Am I missing something here? Why is this trend diverging?
No. See, if you look at it, you are looking at the gross level. You have to see from the published accounts, because the gain on assignment, we stopped. We did only one deal this quarter.
Right.
That is a 0.3, a 0.2. 20 basis points, you will get a drop in.
Oh, okay. So that should normalize next quarter.
Yeah. That will normalize. Because we had committed to certain banks on the assignment deals, so we have gone through that till we could. We had to exhaust the limits set for it. So that, we have said, and we have exhausted. So we may not go again for that in the near future.
So on a full year to full year basis, Arul, the NIM would be flat still. Last year average was 8.05. Now, we are first half already at 8.05, roughly. So it would remain flat on a full year to full year basis?
See, I told you that the cost of funds will go up by 20 basis points. We are trying to stretch and get the other side of the income side to match it. Yes, we will endeavor to do it, but that is a possibility that you will have to factor in at least 10 basis points fall in yield.
Got it.
Which will be more or less, actually, in my opinion, more than offset by credit costs.
And CNN.
Which should still hold us on the overall ROTA being better than last year.
Right. So 3.5 ROTA. Basically, that is what you are varying towards.
Yeah.
That remains unchanged. Got it. Sir, thank you so much, and all the best.
Thanks.
Hi. Next is Raghav Garg from Ambit. The only request that management has made is that, maybe we can just restrict to two questions in the initial round.
Hi, am I audible?
Yes.
Hi. Good afternoon. I just have one question, and this is circling back to one of the questions which I think one of the participants asked. I just wanted to know if you can throw some light on what percentage of your vehicle finance customers or the number of vehicles that you financed is directly or indirectly engaged in agri and allied activities. What is that number for the industrial activity? This is just to understand that if, say, the crop harvest is impacted due to deficit rainfalls, what could be the impact in terms of fleet utilization, for the vehicles which are tied to those agri activities?
I think you've called out tractors, but, even within LCVs and SCVs, which could possibly be used to carry the agri produce from point A to point B. What would be the exposure in those sort of portfolios? That is the only question that I have. Thank you.
We are only seeing one side of the thing. The deficit in terms of rain is 13%, but we are not seeing the sowing. Sowing is actually at par with the last year because of the mechanizing and pump and electricity available. People have done the agriculture activity to the extent of what they have done the last year. At the end of the day, agriculture output is important for the customer who are basically doing that, the specific farmer. The next item is the yield. Yield is depending on the inflation. For them, luckily, the inflation is going up, so they will get a better yield, better income. That is what is important for everyone. That is important. Second is that the deficit is mostly due to the higher deficit in Northeast, Kerala, and some part of the country where the agriculture activity is less.
That is the second thing. The thir d is that there are some parts of the country where the drought has happened, which is actually a drought area, even in the past also. No need to worry about it as of now. We can give you all these details. Details are available with us. We have seen that we do not get impacted as of now from the deficit we have seen in general. Coming to the point, the tractor we have given the mix, it is 3% of the overall book, which is the negligible portfolio of vehicle finance. If you take entire book, then it will be much smaller.
In this market, we are relatively much lower than that also.
Yeah.
Understood. That was my only question, and than ks a lot for that explanation.
Next question from Shreya from Nomura.
Yeah, thank you for the opportunity. Sir, just circling back on the NIMs portion, my first question was, have we decided to hike our lending rates? In which product, from what timeline, or are we still looking at market practice before we take any decision over there? That's my first question. Second is on our insurance. The distribution reform on the insurance piece has been a big reform for credit life product. So what has been our conclusion? Have we come at some maths around how much of a hit can happen to our ROA, ROEs, et cetera? Those are my two questions. Thank you.
Actually, one is important, is that in any case, the overall yield goes up by the overall collection and other income also, which is actually, we have seen that the second half overall yield goes up automatically for us. You can actually see first half to second half comparison. That comes because of as you do collection, other income like AFCC, BG charges collection, other things, short full collection, revenue collection goes up. That's the one important thing to address the yield itself. Then coming to the increase in the cost of fund. As we get the cost of fund reference rate from the finance and treasury, our businesses are continuously incorporating it and increasing it in terms of the marginal lending. Second is that, as and when the floating book is basically ready for increase the pricing, that much we will do it.
As of now, we have a 25 basis point, so maybe affordable housing and Loan Against Property SME, they will do it within one or two months time. They are working on it. This is what the yield side. As far as the insurance is concerned, obviously, if the insurance income is going down, obviously, we need to figure out how to basically make the revenue line up to the mark intact. Therefore, we deliver 3.5% pre-tax ROA. We have done the working. The working is ready. But obviously, we are waiting for the final conclusion. Once that is done, then only will you hear it.
Right. Just a clarification on the repricing. You said these are the three seg. Which was the third segment? Affordable housing, SME, where within one to two months you will reprice. Can you mention the third segment that you mentioned?
Loan Against Property.
The floating book, basically.
All the floating book.
Yeah, obviously. All right, okay. And insurance, you will let us know after the draft reforms are out, is it? How much—
Yes.
—hit on our All right, okay, that's useful. Thank you.
Yeah. Next we have Nidhesh Jain from Investec. Nidhesh, you can ask your question.
Yeah. Thanks for the opportunity. DA income, going forward, we will not do any DA income, or is that a right understanding?
DA is a thing that if liquidity requires me to do, I will do. If there is a bank which is a large relationship and they want us to also participate in some of their initiatives, we will do. It is not like a no or a always a yes. We try not to do as much as possible because it leads to upfronting of the profit, and then the expense comes in a later year. To that extent, we have been avoiding. But broadly, we have also internally decided to keep anywhere between 5%- 7% of the book as a assigned book, if that is what we will work towards to keep that level.
Sure. Second, on the vehicle finance, if I look at the number of branches, that has been broadly flattish. So we have not added branches in the vehicle finance for some time. What are the plans for next year in terms of branch addition in vehicle finance?
No, you have to see both branch and resident location. So resident location, they are continuously increasing it, and put together, they have reached to almost 2,600, no? What is the number to put together?
600 plus 600.
2,600 plus [600].
600.
[389]. That is the number. That number is going up, so there is no problem. They will convert these resident location from the RLs to the branch and then open up the new RLs. That's a continuous.
Still we are moving some 125 RLs to branches because they are already hitting their critical disbursement numbers. That will happen and then once that process continues, then we will add more RLs. It is a work in progress item, and we'll proceed the numbers going up in the coming.
Sure. That's it from my side. Thank you.
Thanks. We have Piran Engineer from CLSA. Piran, you can ask your question.
Yeah. Hi, team. Congrats on the quarter. Just going back to Shreya's question, in another way, have we hiked PLR and home loans and LAP already, or is there a plan to do it this month?
We have not yet through this quarter. We will start by extending it soon, Piran. We'll do it.
Sorry, sir.
We have not done, we will do it in this quarter, coming quarter 3.
Okay. Got it. Secondly, what explains the surge in disbursements in CSEL in the last couple of quarters? It has been fairly strong. Can you talk a bit about your sourcing profile, loan yields, and how we have just suddenly been able to ramp it up so fast?
Not suddenly.
No, it is not suddenly that we have ramped up. We have been doing our homework in the last couple of quarters, and then, we had our underwriting model in place. We had our credit scorecard in place, and then, we were confident enough that this sourcing are in a better position, and that's why we were able to scale up.
This is unsecured part.
Unsecured. Talk about what you have done.
CD, mobile and.
On the CD side, the growth is coming from the mobile financing. We had partnered with Samsung to begin the CD business. However, over the last 12 months, we have ventured open market, and we have tie-ups with all the other OEMs on the mobile space. We have been operational across the country, in majority of the tier three, tier four markets, and that is when the scale of business is coming for us on the CD side.
Also, last year was a little bit base effect is there, because last year we reduced it. Last to last year was like, we went up INR 2,000 crore per month, INR 1,200 crore per month. From there, we have come down, and now we have come to the same level what we used to do, including the partnership business, we used to do what number we have done this quarter. It is like doing the similar number, but because of the base effect, it is looking better.
No, correct. You are without the partner and you are doing the same amount of business, and the partner was big. Is it fair to say that a lot of the growth in disbursements on a year-over-year basis has come from CD financing?
Both. CD is major.
Major is from CD.
40% growth is because of the CSEL and secured also.
Base effect.
Business loan and personal loan.
Okay, so 60% is from CD. Okay, fair enough. Lastly, sir, your views on CV and car demand going forward.
Yeah. It looks very steady and growing very steadily. We just reviewed our business, vehicle finance business, their outlook we have given. Just go to the next page.
Yeah. Actually, sir, because your outlook next three years, in every segment is a lower growth number—
Yes, sir.
—than the past three years. Yeah, the industry outlook that you've given. That's why I would prefer to hear your views from the horse's mouth.
Okay. Just give me one second. [Tugra] will tell you product by product in vehicle finance, what they have done and what we have given. The heavy commercial vehicle segment recorded robust growth of 40% in quarter 2 and 20% in H1, achieving its highest ever H1 sale. The industry demand was supported by strong freight movement, and this look like it will be continued in the second half. So maybe, we may not get this 40% growth what market has delivered in quarter 2. But, I think 20% growth is—
20%, [22%].
—20%-[ 20%], I'm talking from the industry point of view.
Yes.
Is possible. But we need to see that. As of now, for the month of October, it looked like they are delivering around 18% growth. In November, again, due to Diwali, they will again deliver better number than last year November. So for quarter 3, it looked like 20%+ growth will come from the market. This is especially from heavy commercial vehicle. Light commercial vehicle also recorded 25% growth in quarter 2. Small commercial vehicle recorded around 26% growth. Passenger vehicle recorded 31% growth. Two-wheeler recorded 15% growth. So all put together it look like, worst case scenario, 15%-20% growth will come in the second half.
Sir, sorry, I'm referring to the charts that you've put on slides 30 and 31.
Okay.
Where you've got like a prior four-year CAGR and then a future three-year CAGR.
Yeah.
That is what I was referring to, actually.
Which slide is this?
Yeah, that is industry number only we are talking about.
Yeah. All okay, I'll take this offline. I don't want to hold up the queue.
Okay.
Yeah. Thank you, sir, and wish you all the best.
Thank you.
Thanks. Next we have Sanket Chheda from DAM Capital.
Yeah. Hi, sir. Pretty good set of numbers. I just wanted to get a sense on the capital raise. Historically, we have been pretty mindful on keeping our anchoring on ROE, and likewise structuring the raise in equity and, say, convertible warrants or debentures. This time also, do we expect a similar structure?
Yeah. We are looking at both options, either a full equity or a breakup. We have been quite successful in the CCD conversion and that route, but we need to see the appetite in the market and decide. As we come closer to the date of, we will decide.
Okay. Sure. Just besides this year, we are reasonably confident of, say, doing around 24%-25%. Usually whenever, say, after a couple of years of muted growth, we do well for a span of two, three years. Do we expect a similar kind of a growth for next couple of years? If at all you would want to spell that out.
We still hold to that 20%-[23%] on a steady state basis, because there are volatilities that is possible. As we go closer to the year, we will change our list.
Okay. Sir, on cost of funds, I get a guidance for the second half and then for the full year. This quarter, I think, the reported cost of funds have moved 10 basis points, but when you look at absolute basis, on a calculated basis, the uptick seems more like 17-18 basis points. Is there anything that a particular borrowing would have cost more or it will get regularized or corrected in the following quarters? Just wanted to understand about the absolute finance cost being a little higher in this quarter.
No, it has moved up as compared to last quarter by 10 basis points.
Okay.
I don't know where you want to take your offering. Maybe you can take this offline and talk to me on this.
Sure, sir. I'll understand from you. Lastly, I wanted to ask, picking from the earlier questions on new businesses, say, likely to be ROE accretive. If I were to take a view for, say, two, three years now, our guidance is anchored on PBT ROA of 3.5. But, say after two, three years, when the new products also become reasonable size, do we expect this PBT ROA to converge closer towards four on entity basis?
Let us not count our chickens before they say. No, let's hold it. Let's see them get the traction on these new businesses and let them settle down, and then we will change.
Sure, sir. Yeah. Those were my questions. Thanks a lot.
Thanks. Next question comes from Harshit Toshniwal of Premji.
Hi, sir. Am I audible?
Yes.
Yeah. Sir, this question was on the gold loan piece itself. I think a few ones that fund, for us, like if some of the peers called out the issues with respect to the short-term loan, stage two, stage three recognition, and then therefore shifting to the long-term loan. Are we also facing something like that? Or if you can help us at, in our mix, what would be the portion of the short-term loans, less than five month, six month loan?
No, not short-term loan. It is related to EMI-based funding versus bullet loan. Bullet loan means 12-month term bullet loan.
Right.
If you lend the customer based on the EMI, where the customer has to serve the EMI. In this business, we have seen in the past and when we studied that, most of the customers are not paying EMI. In the beginning itself, we decided to go for bullet loan.
Bullet.
Yeah. Wherever the customer has requested, said that, "No, I want EMI," then we have given, but negligible. It is actually overall book, we have seen that 1%, no?
Yeah. It is less than 1%.
Less than 1% book is EMI. Therefore, that kind of delinquency is not there. If you finance EMI based, then your delinquency will be high.
For us, the entire expansion this time has been on the bullet loan, base model itself, largely, predominantly.
Yes. Largely it is. Majorly it is actually. Mostly. Not mostly. Everything is actually bullet loans.
Yeah.
Personal is bullet.
Got it, sir. And sir, also if you can give some context of the gold prices started to moderate, but, we are there into the midway in our gold loan expansion journey itself. How should we look at this book growing? It is obviously growing at a much rapid pace today, but if you can help us with our branch expansion outlook, where we stand today, it will be easier for us to build that business out, and how can that be a growth lever for the next two, three years?
No. We are selectively identifying the market and the branches and then looking for the people to run those branches, and then only we are deciding to open up the branches, not that we are just having a thousand branch opening plan of this. Last year, we have opened 120. This year, we are opening some 380 branches.
Yeah, 360 branches. So by end of this year, we should be at 480 branches.
We will continue to open up the branches, but not that we have to open a very large number of branches. We need to see whether the branches we have opened up are reaching to the critical AUM level. So like, for example, P1 branches, phase one branches as of now, per branch AUM is average.
INR 21 crore.
INR 21 crore. We need to see what is the phase II branches. Our branch opening is depending upon the achievement of the productivity level, and second important is that whether our processes are working very well or not. As long as that is working, it is like steadily opening and cautiously opening.
Sir, if the 450 branches, what you mentioned, say, by end of this year, but INR 20 odd crore per branch, it would be more around INR 9,000 crore AUM approximately.
No, INR 20 crore is from the first phase.
I see, first phase.
Phase I branches.
Got it.
Yeah.
Phase II.
Which was opened last year.
Got it.
Then phase II also, we have to reach to the critical level, which is like a threshold between INR 15 crore-INR 20 crore.
Yeah.
Like that, we need to plan.
Understood, sir. Got it. Perfect, thank you.
Welcome.
Hi. Next, we have Shreepal Doshi from Equirus.
Hi. Thank you for giving me the opportunity, sir, and congrats on a good set of numbers. My question firstly was on the growth side. Given that last year 2H, second half, had a higher volume growth, especially in the vehicle finance segment, the [VM] growth. In this year's second half, do we expect some slowdown there on a year-on-year basis? Secondly, just to add to that, given the macro challenges and drought-like situations on the bigger markets, do you see any slowdown there if things worsen by December, as you are highlighting that you will get a better picture by then? In that case, what is the range in terms of the growth that you would want to highlight?
No. First of all, by December, we are saying that those districts which has been impacted, those are very limited market which have got impact. What is going to happen in those small portion of the country, that only will be clear by December. As of now, sowing is not impacted. In spite of rains are down or deficit is there, in spite of that, sowing has not been impacted. That is what I was saying. The big market is not impacted. Most of the market where the Kharif is actually getting cultivated, most of the market, we have seen that rain deficit is not there. The rain deficit would move into the Vidarbha, Malwa, some part of Madhya Pradesh and some part of Karnataka, and these are the—
Drought districts.
—drought-prone districts where this has happened. We don't see that is going to impact the growth momentum. That is point number one. Point number two is that as of now, because of the base, the growth momentum will get slowed down. That is what is not visible as of now, going by the October. Momentum also looks like it will be continued in the second half. The percentage of growth will go down as compared—
Got it.
—to first half to second half, but it will not go down so low that we start saying that it is slowing down.
Got it. Our full year guidance of 20%-23% holds, right? Or it's now 24%, 25%?
Yeah. We hold our commitment, whatever we have given in terms of growth.
Got it. Just second part, since some of the smaller and high-yielding segments have started to grow at a much faster rate, what is the mix that you see by FY 2028 and especially products like CSEL and SBPL in terms of the overall mix?
We have said that vehicle is 52% as of now. HL is around 10%, 22% is the LAP. So the mortgage, which is close to 36%-37% put together, which is likely to slightly go up by 2028, 2029. Exactly, we can't say which year, but within three to four years' time, we are expecting mortgage business to go up because they are funded for longer tenor. Vehicle finance, which is financing for five to six years, obviously, they will come down from 52% to below 50%. That only the change will happen. As far as the small ticket size and consumer business is concerned, where CSEL, CD and gold is concerned, they are going to be within 15% max in the near term.
Got it, sir. Thank you so much, sir, for answering my questions, and good luck.
Thanks.
Thank you.
Thanks. Next, we have Arvind from Sundaram Alternates.
Yeah. I just had two questions. Actually, one question on the cost was already answered. Just one clarification, if I can ask. You mentioned the cost of funds could go up by 10 basis points- 15 basis points for the full year basis. Is it assuming that another 50 basis points in rate hikes can happen or not assuming?
Assuming another 25 basis points.
Okay, another 25 basis points.
25 basis points down, 25 basis points take may happen. Overall, 50 basis points. That is the assumption.
Okay, sir. Understood. Thank you.
Thanks. Thanks. Next, we have Renish. Renish, you can ask a question. Renish from ICICI.
Hello?
Yeah, go ahead. We can hear you.
Hi. Congrats on good set of numbers. Sir, just one thing, in the LAP business, when we look at the IRR, so last maybe seven, eight quarters, there has been a steady increase in LAP IRR, from 12.5% to now almost 13.3%. Is there any mix changing within LAP book, like micro LAP share are driving this higher IRR? Or what is sort of driving this better IRR in the LAP business?
Yeah, LAP business, we mentioned that they have started small LAP business also. They have now two product. One product is for the urban market and one product is slightly between urban and rural markets.
Rural markets. Yeah.
The product which they are doing at Small LAP started doing almost 500 disbursement per month, and their yields are higher. That is the reason the overall yields are maintained.
Okay. Sir, what will be the average ticket size in Small LAP business?
The ticket size will be between INR 15 lakhs-INR 20 lakhs would be the average ticket size.
INR 20 lakh is the average ticket size.
Okay. And the yield will be what? Upwards of 14%?
No, the yield as of now, we have not given—
Okay.
—segment-wise.
Okay. Got it. Sir, just last thing, maybe slightly repetitive in nature, but just curious to ask. Seeing all the events or challenges persist today in terms of the draft paper on the Insurance Commission, maybe likely a moderation due to rising rate cycle, plus and obviously you did clarify that we have limited exposure. I can understand from a 2027 standpoint, given first half being very strong, we are already in October, wherein things looks better. But when we enter 2028, right, and if some of these events might unfold, flip side versus what we are thinking right now. Do we have any levers in place to mitigate any adverse impact which can arise from this event in FY 2028, so that we can sustain the 3.5% PBT growth in 2028?
Over the years, last 15 years, if you see that there are many time this kind of ups and down came in our life, not only for Chola, for the entire country and entire industry, and industry sail through all these challenges. Let us hope for the best. There is no clarity that what is the impact is going to come from the insurance income coming down or drought is going to happen. They are all discussed as of now. As I mentioned that I don't see the drought is going to create big problem in terms of the farmer income.
Farmer income is not getting impacted as of now for the Kharif point of view. We need to see reservoir level point of view, that how much is Rabi is getting impacted, and that is going to be seen the impact coming from the next year. That's the reason I said December, because December only we'll come to know whether Rabi sowing—
Okay.
—is going to go down or not. If that is not going down, then we will definitely wait for the next year rain. If the next year rain has a deficit, then only next year we'll have a problem. Insurance income, as I mentioned, that we have already evaluated and seen that is not going to create a big problem for us because we have a plan B ready, and we are waiting for how much income is going to go down. Accordingly, we'll make a plan, and then we'll only turn it up.
Got it. Maybe the increased share of this high profitable product might be a lever for us. Is that the right assumption?
No. In any case, it was there only. That is not for handling the insurance income or drought. Without that is there. So that was always. We keep trying to diversify, keep getting the product in order to basically continue to grow and sustain the income level, in order to basically sail through problem time to time.
Got it. This is very helpful, sir. Thank you and best of luck.
Thank you.
Thanks. We will just take one last question from the line of Shubhranshu. Shubhranshu is from PhillipCapital.
Thanks, Nischint. So, two or three questions. The first part is, Maruti increased its guidance yesterday on its call. So, how do we look at the passenger vehicle growth going forward in the next 12-18 months? Second is, which are our largest states in terms of total exposure, which includes vehicle finance, LAP, and all other business that we do. If we can point out to the top five states. And how many people do we deploy in collections and CSEL? Thanks.
Vehicle collection is easy to answer.
Easy to answer.
Collection, absolutely. I have a large number of team in collection. I can say that now it is more than the sales team I have in collection team for.
How many? What is the count, actually, they ask.
What is the count which I have around 1,800?
In CSEL. Specifically for CSEL, I am asking, sir.
CSEL part one is 1,800. Part two?
Sorry, agency. It is about agency.
Almost put together is around 2,800 people are working in CSEL collection.
This on-roll or payrolls?
Half are on roll and half are agency.
Agency. Right.
CSEL unsecured is entirely in the roll, which is like 1,800. Then around 1,000 people are basically in agency.
Understood. The first two questions?
You are asking about the overall disbursement by the state?
Passenger vehicles especially. What is our market share in Maruti, and how do we think that it is going to increase with Maruti's own guidance going up?
No. One is that we don't want to give you segment by state and by market, but we would like to mention that we are one of the largest player in the Maruti, and we have been continuously increasing our market share with them, especially in the upcountry market, rural market, where whatever entry car we are selling, we are the partner with them. We are one of the preferred partner with them. As they grow, our number is likely to grow. But we are gaining the market share as well every time.
Right. Which will be our top five states in terms of total exposure?
That's what, as far as the Maruti, we don't want to disclose that.
No, not Maruti. Total. All business.
All that is there in the industry presentation itself. One second, we'll give you.
That's only for vehicle finance. You don't give it for the other businesses.
Okay.
That is right.
Yeah. Correct. Vehicle finance, we have given. Maybe then we'll give you this number as and when we'll be ready with all the businesses put together.
Okay, sure. Thank you.
Thank you, everyone. That ends this call for today. Thank you very much for joining us. Thanks to the management for giving us an opportunity to host the call.
Thank you, Nischint.
Thank you.
Thank you, Nischint. Thank you.
Thank you. Bye.