Tanla has more questions than answers.

Airtel is 2 partner in DLT incl Tanla. Jio is insourced/tech mahindra.

URL whitelisting – no i don’t think it increases market share. On the con call you should ask if it increases revenue ?

Airtel will have edge in SMS and maybe RCS. Rest no.

SMS to OTT will happen for marketing and Airlines. Rest bank transactional , OTP etc really no. There is no incentive to shift.

Tanla should lay out for shareholders the impact of regulatory changes. These questions should be asked on con call.

Cholamandalam Investment and Finance company –

Company overview + Q1 results and concall summary –

A leading NBFC operating across 26 states and 7 union territories in India. Total AUM @ 1.7 lakh cr. Mainly operating in segments like – Vehicle finance, Loan against property, Home loans, Consumer loans, personal loans, SME loans, Stock broking and distribution of financial products

Current branch network @ 1438 branches

Q1 FY 25 financial outcomes –

Closing AUM on 30 Jun @ 1.68 vs 1.22 lakh cr ( up 38 pc YoY )

Disbursements in Q1 @ 24.33k cr vs 20.01k cr YoY

Net Interest Income – 3033 vs 2127 cr ( up 43 pc )
Expenses – 1183 vs 787 cr ( up 50 pc )
Credit losses – 581 vs 372 cr ( up 56 pc )
PBT – 1268 vs 968 cr ( up 31 pc )
PAT – 942 vs 726 cr ( up 30 pc )

NIMs @ 7.0 vs 6.9 pc
RoA @ 2.4 vs 2.5 pc

Gross Stage 3 assets ( ie pending for > 90 days, basically Gross NPAs ) @ 4123 vs 3546 cr ( corresponds to 2.4 vs 2.9 pc of loans )

Provisions @ 45.5 vs 45.4 pc of gross NPAs

Breakdown of Q1 loan disbursements and segmental profitability –

Vehicle finance – 53 pc of total disbursements –

Disbursements – 12.27 k cr, up 13 pc YoY
PBT – 620 cr, up 24 pc

Breakdown of company’s vehicle finance business –

Construction Eqpt – 6 pc
2W + 3W – 8 pc
Used vehicles – 27 pc
Tractors – 6 pc
Mini LCVs – 3 pc
Cars + MUVs ( mainly for commercial use ) – 22 pc
LCVs – 20 pc
HCVs – 7 pc

Segmental NIMs @ 7.9 pc, RoA @ 2.9 pc, Loss provisions @ 1.9 pc

LAP ( focussing on SME customers, giving them business loans against security of their immovable properties ) – 16 pc of total disbursements –

Disbursements – 3.8 k cr, up 45 pc YoY
PBT – 292 cr, up 31 pc

Continue to increase their focus on this segment – specially in rural and semi urban areas. This is a high growth, lower margin, lower risk, lower credit cost business

Segmental NIMs @ 5.7 pc, RoA @ 3.8 pc, Loss provisions @ 0.1 pc

Home Loans ( company operates in the affordable segment ) – 7 pc of all disbursements –

Disbursements – 1.77 k cr, up 22 pc
PBT – 163 cr, up 88 pc

Company focussing on untapped rural areas

Segmental NIMs @ 8.8 pc, RoA @ 4.7 pc, Loss provisions @ 0.3 pc

Newer business segments –

SME loans ( focussing on supply chain financing, loan against shares, loans against machinery etc ) – 9 pc of all disbursements –

Disbursements – 2.16 k cr, up 6 pc
PBT – 24 cr, up 57 pc

CSEL – Consumer and Small Enterprise loans – ( Offer personal loans and business loans to salaried , self employed professionals without collateral ) – 14 pc of all disbursements –

Disbursements – 3.48 k cr, up 48 pc
PBT – 101 cr, up 93 pc

SBPL – Secured business and Personal loans ( offer secured personal loans against self occupied immovable property ) – 1 pc of all disbursements –

Disbursements – 268 cr, up 48 pc
PBT – 30 vs 1 cr YoY !!!

Company conducts its business through an extensive branch network of 1438 branches. The geographical breakdown of branches is as follows –

South – 29 pc
North – 23 pc
West – 23 pc
East – 25 pc

The rural : semi urban : urban spit of branches stands @ 83 : 12 : 5

Company has aggressively expanded its home loan business ( and also branches offering home loans ) over the last 2 yrs. Now they will concentrate on consolidating their gains and on driving greater productivity before commencing further expansion in next FY

A lot of aggressive investments in new branches and spike in operating expenses should now be behind. Going forward, company expects operating expanses to gradually keep coming down year after year ( even as they gradually keep adding more branches )

Unlikely to raise equity capital for next 2-3 yrs

Confident of maintaining growth rates in the 25 – 30 pc band ( with an upward bias )

Over the medium term ( FY 26 and beyond ), company expects their credit costs to settle in the 1-1.2 pc zone ( primarily because the LAP and HL portfolios have structurally lower credit costs )

Currently – the newer businesses ( SME + SBPL + CSEL ) comprise of 13 pc of company’s loan book. Company aims to take this to 15 pc and stabilise there. Out of this, the unsecured portion should settle at around 8 pc

Company expects a further pick up in disbursements wef Q2 ( because Q1 witnessed some kind of dampening in credit demand due elections )

Management believes, this 25+ kind of growth rates are achievable for next 3-5 yrs. They don’t see any macro headwinds that may hamper / prevent them from not achieving these high growth rates. They also aspire to hit the 4 pc RoA mark in next 5 yrs !!!

Expected to add another 200 branches in the current FY

Chola is one of the largest player in India in the used vehicle finance space

In the business loan segment, 83 pc of company’s customers have a credit score > 725, 13 pc customers have a credit score > 700

Disc : have bought recently, biased, not a buy/sell recommendation, not SEBI registered

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I’d like to share a different perspective on this. If a company has excess capital, they can either return it to shareholders in the form of dividends or buybacks or park it in a safer instrument like liquid funds / fixed deposits. If they go about investing in equity, they are only broadening the risk vector (capital market downturn) beyond their inherent business risks. Our job is investing, their job is doing business, not taking undue risks in capital markets.