Good evening. Welcome to the earnings conference call of Cholamandalam Investment and Finance Company Limited.

We discuss 1Q FY '27 earnings today. The senior management of the company 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 Q&As.

Over to you, Vellayan.

Thank you, Nishant, and thank you, Kotak, for hosting the call. Good morning, good afternoon, everyone.

I'm happy to take you through our performance for Q1 FY '27. Chola continued its strong growth trajectory in Q1, reporting aggregate disbursements of ₹29,612 crores, up 22% year on year, reflecting healthy performance across all major businesses.

As a result, our AUM expanded 23% year on year to ₹2,54,392 crores, underscoring the strength of customer demand and effectiveness of distributing and operating model. The vehicle finance business maintained its growth momentum with disbursements increasing 21% year on year during the quarter.

Growth was aided by healthy demand trends across key vehicle categories and deep market penetration, resulting in auto OEM growing 19% to ₹1,24,132 crores. The MSME portfolio also demonstrated continued resilience with disbursements growing 6% year on year and AUM increasing 26% year on year.

The segment benefited from sustained customer acquisition and continued expansion in underpenetrated markets. Within the segment, LAP AUM grew 23% year on year to ₹54,130 crores and SBPL recorded robust growth of 39% and 40%, reaching ₹9,923 crores and ₹3,730 crores respectively.

Consumer segment delivered strong growth during the quarter with disbursements increasing 52% year on year, reflecting sustained traction across all product categories and continued customer acquisition momentum. As a result, AUM grew 24% year on year to ₹41,671 crores.

Within the segment, home loans continue to scale steadily with AUM increasing 22% year on year to ₹23,644 crores. CSEL AUM grew up 12% 12% to ₹15,884 crores, while gold loans witnessed strong expansion with AUM reaching ₹2,143 crores, supported by growing customer acceptance and network expansion.

NIMs improved by 42 bps year on year in Q1, supported by lower funding cost. Credit cost declined by 24 bps year on year, aided by healthy collections and continued stability in portfolio performance.

Continued improvement in margins and asset quality drove stronger profitability with ROA increasing to 3.7% in Q1 FY '27 from 3.1% a year earlier, while ROE stood at 21.2%, reflecting the company's disciplined growth strategy and efficient capital deployment. Company continues to maintain a strong liquidity and capital position with total liquid assets of ₹16,984 crores, including undrawn sanctioned lines.

As of June 2026, the capital adequacy ratio of the company stood at 19.81%, with Tier 1 capital at 14.81%, providing ample headroom to support future growth. Of the ₹2,000-crore CCD issuance, ₹1,370 crores was converted into equity during FY '26, followed by a further ₹200-crore conversion in July 2026.

The remaining 433 ₹430 crores of CCDs is expected to be converted in October 2026, further reinforcing the company's capital base. Nishant, the team, with that, I will stop and turn it over to participants for questions.

Sure, thanks. Thanks, Vellayan.

The first question comes from Kunal Shah of Citi. Kunal, you can ask your question.

Yeah.

Hi. Firstly, if you can just highlight in terms of the overall macro environment, any business impact that we are looking in any of the product segments, and would there be any risk to the credit cost guidance which we had even earlier of say almost 1.5-odd percent for FY '27?

Because this quarter, we have seen increase across the board say in stage three for most of the product segments except for CSEL, yeah. Yeah.

No,

first of all, the net credit cost has already come down to 1.5% from 1.8% of the last year, we have achieved the target. I don't know why you are saying it has gone up.

No, he's concerned about GNPA, is that—

GNPA you're talking about? GNPA is basically the seasonal effect, where it normally goes up from quarter one to quarter four to quarter one, and it went up significantly higher last year as compared to that it has gone up only 25 basis.

That way, our start has been fantastic in terms of stage three and stage two improvement from or increase from quarter four to quarter one, and that is the reason there has been an improvement in net credit cost as against last year of 1.8% to 1.5%. Now, coming to the disbursement and market what we are seeing with respect to the businesses what we are doing, as of now, we see that all the business lines, whether it is vehicle finance or loan against property or housing loan or SME or SBPL or CSEL or gold, and even consumer durable for us, we are seeing quite good trend even in the month of July and likely to be better growth continued to be in the coming quarters also.

We haven't seen any adverse impact on our disbursement or the growth, whatever we have been discussing that 20% to 23%, they are still holding it.

Okay. No product segments wherein you see any risk cropping up in second or third quarter because of be it below average monsoon or maybe the geopolitical conflict, any product segment wherein you could see maybe a slightly higher stress?

Currently, that visibility is not there that what is going to happen in quarter three after the even the rainy season is not over. We are expecting that July and the whatever days left out and August, it will be good rain.

As you know that, the prediction is 92% rain, which is like slightly below month below average as against the 96%. If that happens, then it will not be so bad.

Therefore, we are continued to hope that the quarter three, quarter four also will be good with respect to all the product segments.

Sure. Just a couple of data point questions.

One is on the used vehicle disbursement side. Is it again more of a seasonal, it's down maybe sequentially as well as in terms of the proportion in the overall vehicle finance disbursements?

Second, in terms of home loan yields, that's also down almost 60 basis points quarter on quarter. Would this be more like a Q4 to Q1 phenomenon, or is there anything to read into this?

Thanks.

No, no, no. Actually, for the vehicle finance, disbursement has been up to the mark.

Obviously, quarter one growth is slightly lower than quarter four, that happened always. When it comes to—

No, on used vehicle particularly.

Yeah. It is the same line only.

Used vehicle or new business they put together, they have grown more than 20% in disbursement. Their growth has been good only across all segments in the vehicle finance.

Coming to the point that mortgage business, whether it is home loan or loan against property or even SBPL, and even in the case of used business, we have moved to recognize the disbursement by the check clearance from this quarter onwards. To that extent, wherever we issue the check and complete the formality, whether it is used business or it is home loan business or loan against property and the SBPL business, the disbursements are slightly lower.

Like to like, if you see that, they have grown more than 20%. From next quarter onwards, you won't see this gap opened up because this is a one-time call we have taken and said that now our all the disbursement will be aligned to the check clearance date instead of check disbursement date or check handover date.

Got it. Perfect.

Yeah. Thanks a lot.

Even after this, overall disbursement has been over and above 20%. That is also you have to consider that.

Even interest income would be lower because of this maybe, and that's the reason home loan yields are lower 60 basis points quarter on quarter in terms of when do we start booking the interest income? Would that have impacted the interest income line item in home loan in particular?

No, no, no. See, in the case of home loan, they are now moving to the slightly bigger ticket size also.

A branch expansion which they started now, which is going to take over in next 6-month time. If you see that, their interest income has improved from 15.5% of last financial year to 15.9%.

In a way, their yields are higher than last year, their yields are not going down. Their ROA also has improved from 3.9% pretax ROA to 4.7%, yeah.

I don't see what data you are referring to based on—

Quarter-on-quarter, sorry. Yeah.

Quarter-on-quarter always across the company, across all products, what happens is that last quarter, we do very good collection, and collection income goes up. Overall disbursement goes up, the other income goes up.

Because of that, overall income always quarter four is higher than quarter one, and then again, from quarter one, it start picking up towards quarter four. That's a normal phenomenon.

Got it. Perfect.

Yeah. That answers all the questions.

Thank you.

Thanks. Raghav Garg from Ambit, you go next, Raghav.

Sir, thanks for the opportunity and good afternoon. I just have one question.

See, when I look at your slippage ratio, and maybe if we round it off to just one decimal place, it's around 0.7%, which is same as Q1 of FY '26. I think the expectation may have been for a higher improvement.

I just wanted to understand if there's anything to highlight in any of the segments if you're seeing any asset quality pressure. Just couple of more data points.

In LAP and the vehicle finance portfolio, your gross stage three percentages are also up YoY. Where I'm coming from is that last year first half was probably much more intense in terms of flows into the NPA bucket versus what we've seen in the second half and what we were expecting for this quarter or maybe for this year.

Anything to highlight specifically in LAP and VF, and in general, overall? That's the only question that I have.

Thank you.

No, we have mentioned that, that from quarter four to quarter one, there is always slight jump is there, and then, quarter one to quarter quarter two, quarter three, it is always improving, and you have seen that. In the loan against property, they have already delivered 0.3% of net credit

loss. It has been always at 0.3%.

For the LAP business, the loan losses have been at about 30 basis points. For this first quarter, it is 30 7, 38 basis points.

On an annualized basis, this will be maintained at 0.3%. It won't go beyond that.

The other outcome of stage three on LAP is it's been at the same levels. Why?

The percentage increase in the Q1 and the Q1 of '26 and '27 remains almost the same. It's also on the same range only between 2.3% to 2.5%.

We are not seeing any specific stress or trend, and we are pretty confident that this will be resolved.

Understood. Just one more question.

If you guys can give the vehicle finance slippages, the absolute numbers for this year and the same quarter last year, if that's possible. That's all from my side.

Thank you. See,

even if you see the vehicle finance number, vehicle finance as on 31st March 2025, the number was actually lower than the March closing of 2026. March number was 3.84, and even the previous year, it was lower.

We need to see that even March number was higher than the last year June number. Now, if you compare the March to June, last year March to June was 3.52 to 3.89, which is almost 45 basis point increase from the annual closing to quarter one closing, as against that it is only 20 basis point has gone up from 3.84 to 4.05.

That is what we are trying to say that the last year increase was 45 basis point, and now it is the only 25 basis point, it is easy for us to basically reverse it over the year.

Understood. Point well understood.

Thank you. That's all.

Thanks, Raghav. Next is Piran Engineer from CLSA.

Yeah. Hi.

Thanks for taking my question, and congrats on the quarter. Just firstly on asset quality, is there scope for further reduction in NCL just simply because the share of CSEL is much lower today and we've cleaned out the fintech part of it and vehicle is on a recovery mode?

See,

first of all, we said we will be trying to reach 1.5% in this financial year. Luckily, we achieved it in first quarter itself.

It is achieved because the increase in the NPL because of the higher increasing or lower increasing stage three compared to the last year is actually benefiting us to achieve that 1.5%. Obviously, we achieved 1.5% in the quarter one, by end of this financial year, it will be improved only.

It is nothing, because not only CSEL, but other businesses are also going to reduce their NCL, including the vehicle finance. That scope is there.

CSEL itself is going to further reduce because they're continuously improving their NCL, and we are in the process of improving further in this financial year. That part is also available.

Understood. Sir, next question for Arul sir.

When we speak with the banks, they say that now they have much more pricing power on corporate loans, especially NBFC loans, than they had say 6 months back. Do you also see that in your dealings with them, and what does this mean for our cost of funds going forward?

The cost of funds has been low, especially from banks when we borrow, we borrow mostly the priority sector loan. There we have a better bargaining power over them.

On the market side, cost of funds has been slightly hardening, and we are worried whether the second half there will be a rate increase. If that happens, cost of funds may go up in the second half, and overall cost of funds may go up by around 10 basis points.

My guess is for the full year, we'll be same as last year number as a percentage to average assets. That is primarily because last year first and second quarter were high and the third and fourth quarter were low.

This year, first and second quarter will be low and third and fourth quarter may be higher.

Understood. Sir, this is assuming no rate hike, the cost of funds will be flat?

This is assuming rate hike of around 25 to 50 basis points. I'm talking rate hike on the repo.

On the repo. Of—

Yeah.

Today between a bond and a bank borrowing, the non-PSL bank borrowing, what would be cheaper?

Right now, the bank still is cheaper, but sometimes it will be MCLR-linked. If it is MCLR-linked, then we don't know where it will ultimately land because if there is a price increase, the repo rate goes up and they hike MCLR, it can be a problem.

Bond, that way, is a fixed rate. To that extent, you have a more visibility on it.

Understood. Just lastly, in the home equity business, our yields are up 30 bps QoQ and YoY.

Is there some one-off DA income booked in that?

No, no. No DA income gets booked in.

For the individual businesses, DA income is shown separately. DA income is not part of that business.

Then that's—

It's a business income.

It's a

business income only. Achha,

30 bps, it has improved, okay. We've hiked our internal

rate?

No, no, no. They're continuously going for LAP and yield income, both put together.

Yeah. One is small ticket LAP increase, as well as going deep tier.

Which is also helping us in increasing the yields.

Understood. Okay.

That's it from my end. Thank you and wish you all the best.

Thank you.

Thanks. Next, we have Shiswan from Schroders.

Hey. Thanks so much for the opportunity, and congrats on a good quarter.

Just want to follow up on your comments that disbursement number that we see this quarter is impacted by definition change on timing of recognizing disbursements. Just want to understand on a like-for-like basis, what kind of disbursement growth are we seeing this quarter adjusting for that?

Yeah. See, the disbursement, there are different ways of being recognizing.

One is at the time of loan sanctioning itself. That was the initial way of doing it.

Then we made a change that it will be at the time of handing over of the check. To be more conservative, to make sure because this handing over of a check cannot be established with any specific date which is validatable, what we have done is now we have moved from this quarter to debit in the bank account itself of the respective check.

That is a provable, validatable data. That way, that has moved the disbursement numbers slowly.

From next quarter, you will see them as per the same way we are doing it now. Once we start doing it in the same fashion, you will see the growth happening correctly.

Got it. This impacts HL, LAP, and SBPL all, right?

It is more pronounced in LAP and HL because there is a time lag between the cutting of the check versus the customer depositing. For example, in vehicle finance, what happens is it is a trade advance given to the dealer, and then it's only a delivery order that's given.

Already, the money is given to the dealer, there is no need to prove that this money has gone to the dealer or for the customer. The DO date will be the delivery date.

Whereas in the case of LAP, there is a time lag between the time the check is cut versus it gets honored because it needs to be entered into the registration document and which takes some time at the registrar office, etcetera. You're

saying used vehicle also is impacted by this definition change?

In used vehicle also, it happens because there again there is a time lag between the time we cut check versus the physical registration or the hypothecation of the vehicle happening. Wherever there is a shift of asset from one individual to another, there will be some time lag.

Whereas it is a purchase of a new asset, then it flows through immediately. Okay.

Does this also impact the timing of the start of recognizing of our interest income in the P&L also?

In all the cases, we will follow now the debit into the bank account as the modus.

I see. Just adjusting for this definition changes, what's the like-for-like organic disbursement growth for home loan and LAP?

It will be around 20% in the case of LAP and HL. Instead

of—

That's why the AUM growth is a better measure to watch for, and that is where we have been consistently growing. Because the time lag gets absorbed.

The difference is so organically is 20% for HL and LAP?

Correct.

Got it. Thank you so much.

Thank you.

Hey. Nishant here.

Just curious, is this because of any new regulation or something that has come in for NBFCs that you have changed this?

No. See, what happens is the delay between the check cutting date or the loan booking date and the check honored date is slightly larger, then RBI says that the customer is losing interest on the intervening period, and they want us to reverse the interest.

We started reversing the interest more than a year back. What happened was the asset is lying in the book, and then it is seen as an asset lying in the book without earning interest because you're reversing the interest.

We needed to not recognize the asset itself in the first place. That is the reason why we are now saying we will recognize the disbursement only after the check is honored in the bank.

This is not based on any RBI regulation. It is our call that we have taken in order to basically be more prudent.

Very technically, this could just mean that maybe at a margin, your yields could look a little higher.

In a way, yes, because last year, the AUM carried some of the disbursed assets without the interest being recognized because we have been reversing the interest manually. To that extent, because the denominator is marginally coming down.

Thanks. Next is Viral Shah from IIFL.

Viral, and just one request to all participants, just stick to two questions because we have a long queue. Thanks.

Sure. Thanks, Nishant.

Thanks, everyone, for good set of results. Just a couple of questions.

I'll try to restrict it into two. Sir, just from the perspective of the guidance for this year, right?

In this quarter, as you called out, there were some realignment changes with regards to the disbursement recognition, but despite that, we have delivered a 22% disbursement growth. Even in the VF, we are at close to 21%.

On the credit cost front, we are starting the weakest quarter for us at 1.5%. I understand there is basically second half the risk given the El Niño, etcetera, but we are also carrying a ₹200 crores of buffer provisions.

With regards to your guidance, both on the growth as well as on the credit cost front, do you see some risks to the upside for this year or say at the higher end of it?

As I mentioned earlier also, Viral, to someone that, we are still hoping that we will continue to do well in this financial year. In terms of disbursement, second half is challenging because last year, the growth started happening from the second second half only.

Having said that, market is still looking very buoyant, and we are also in vehicle finance and in other businesses also, we are getting a little bit market share benefit in terms of like new businesses, CSEL, SME, they are doing good business. Considering that and also now loan against property, housing loan, SBPL, mortgage businesses, and vehicle finance, used businesses, from next quarter onwards, the, there is alignment done with respect to disbursement date and disbursement recognition, we won't have any problem in terms of delivering the number what we are seeing as of now, other than the base effect in the quarter three and quarter four.

Quarter two will definitely will be as better as good as what we have done. After that, we have to see the market is supporting or not.

If market is continued to be what it is now in the current quarter or or it is slightly around that, we can still deliver 22% disbursement growth even quarter three also, quarter three, quarter four also.

Right. Does that mean, sir, from an AUM standpoint, this year 23% kind of number looks more doable for you?

Yeah, 23% today we have already achieved, I think it is doable. We definitely not going down.

Got it. Sir, the second question, Arul sir, more so for you.

You mentioned that after baking in some bit of repo rate hike, you are expecting not more than 5, 10 basis points kind of a cost of fund increase from here on, which means on a full year, it will be kind of flattish. When I overlay this with say the yields wherein our mix is changing favorably with the CSEL business also now starting to grow, plus the fact that we will get the CCD conversion money close to ₹630 crores, the effect of it will come after this quarter, do you think that on the margin front, we can actually see a meaningful margin expansion in this year on a full year basis?

I mentioned about the cost of funds first. That's what I said it will be flat.

NIM will improve. That's on the other side.

You're right. As CD is improving, gold will improve.

Those two to bring, but let us see. Let's not count the chicken before.

As of now, NIM is 8.2%, and we are hoping that we'll hold it either with the help of Arul sir or with the help of the business heads sitting here or both put together, they will help us to basically continue to achieve this growth in terms of NIM.

See, there are other, sides to it. The insurance IRDA is coming with some [unclear], let us not let's be as it is.

Okay.

Now that sir you mentioned that piece, would you also want to basically just call out either for—

Let the circular come, then we'll decide about it. It's not going to happen for this financial year is what I heard, let us see what it brings out.

Just on that point, in terms of data, what is the associated kind of opex that is related to that income so if you have to assess what can be the risks to the bottom line, if at all?

No, no, I don't want to comment on it

because

without knowing what is the circular and what is the implication, we should not talk about it.

Got it. Got it.

Makes sense. Thank you.

Next is Abhijit from Motilal.

Thanks, Nishant. Ravi sir, first question is for you.

We would have seen, right, all through the course of this call, a lot of questions on asset quality. I think, predominantly what people are trying to understand is that among all the NBFCs that have reported until now, we have generally seen good credit trends.

In other words, maybe the deterioration that we are typically used to seeing in the first quarter was maybe not as pronounced as what we saw in Chola's results this time. Having said that, we heard you that the kind of deterioration which was there from 4Q to 1Q last year, this time it's much lower from 4Q to 1Q this year.

Just trying to understand, this is just normal what you've said earlier, or is there something that we would look forward to in terms of the various developments which are there? It could be this US war, the West Asia crisis, or for that matter, El Niño or weak monsoons.

The only reason I ask is over the last 1, 1 and 1/2 months, the NBFCs that we've met, very often they say that even if this year the monsoons are relatively weak, despite that, the impact of weak monsoons will only be felt next year and not this year. If you could help us understand this piece, why is this the case, and what your thoughts here.

Yeah. Abhijit ji, you need to see that what is our stage two and what is our stage three.

These are the two delinquency points. Stage two has improved from June '25 to '26 by 33 basis point, and stage three has been increased from 3.16 to 3.29, which is 13 basis point.

These two data points should be added and see that what is our delinquency level. Our delinquency level is only 6%, that means 94% are current.

Suppose you're comparing with any other NBFC, see that what is their delinquency level, what is their current, and what is their noncurrent.

That means

how much the delinquent and how much is nondelinquent. If the company has 96% 94% of the account is actually paying on time, then if there will be seasonal effect little bit.

What I am saying is that even after that, our numbers have improved from quarter one to quarter one in terms of overall delinquency. So, 33% 33 basis point has improved in stage two, and 13% basis point has deteriorated.

Put together, the overall delinquency has improved by 20 basis point year on year, and that is why it is reflecting on the net credit cost. Otherwise, net credit cost would have not improved because our target to achieve 1.5% of net credit cost was for the full year, wherein we have achieved that in the first quarter because we have improved significantly better.

We have to see why we were saying 1.5% for the year, and why we have achieved 1.5% in the quarter one without comparing with anyone else. Suppose you compare, then compare what is their stage two plus stage three versus what is our stage two plus stage three, and then see where they have gone up and where we are.

That is the delinquency comparison. Now, coming to three problems: one is the West Asia crisis, then your El Niño effect, and then you have some macro-related issue which can come up in the second half, that's what people are talking about.

What we are seeing that, and last time also when we were discussing with the investors, we said that quarter one is looking better, and it will deliver better number for the industry itself. Similarly, what we're saying, quarter by quarter only we will talk, we cannot predict so long.

Therefore, what we are seeing in this financial year in this quarter that July has been better till now, and it is likely to be better. We are expecting to improve credit cost from here further.

That means we are considering all kind of problem and saying that. Now, if any ill effect comes out at a later stage, at that point in time only, we can say that.

Till now, we do not have that visibility that how much it can impact. According to us, it is not impacting as of now, and therefore, we are very confident about quarter two and quarter three.

Got it, Ravi sir. Sir, just to sum that up, whatever we've seen in this quarter is just seasonality at play, and given the visibility that we have today, we're still confident and when we get to let's say March '27, those asset quality numbers will be better than March '26?

See, in fact, first point what you're making it now, one or two people also said that the seasonality. What I'm seeing that even after seasonality, our performance has been good.

That please note it down. Definitely the quarter four to quarter one, there has been some deterioration.

It happens every time. In terms of delinquency, there is a U type of shape happen.

It goes up from quarter one, and then quarter two, quarter three is flat, and quarter four comes down. This time, the U is slightly started with small, and therefore, the delinquency level by quarter four going to go down better than quarter four what we have seen last quarter.

Got it, sir. Then the last question that I had was on gold loans.

I understand still very early days, but how are you seeing traction in that business? What are the plans there?

Or just trying to understand how's the competitive landscape in the gold financing space?

Gold loan, we have decided to open another 360 branches. We have reached to 2,000 crore plus AUM now and likely to reach 5,000 crore in this financial year.

The branches are doing well. Our per branch AUM has been now 12 to 15 crore, which is going up continuously.

That is the reflection of the people are productive in the new branches, and also the branches which we are planning to open up, they will also start delivering 12 to 15 crore in this financial year itself. That means next year by the next year end, all the branches what we are opening this year will become profitable.

Got it, sir. That's all from my side.

Thank you so much for answering my questions, and I wish you and your team the very best.

Thank you, Abhijit.

Next is Mr. Arvind Ravichandran from Sundaram Alternates.

Hello, sir. Thank you so much for the opportunity.

Actually, I'm just continuing on the previous question raised by Viral. Most of my questions are answered in other with respect to other segments.

Only with respect to SBPL, even there actually we have seen deterioration in that business for the entire market, and from there, we saw continuous improvement for the past two quarters. Suddenly, you again see increase in NPA.

That one segment I was not able to understand why that happened. Is there anything to be worried about in that particular segment?

With respect to CSEL, can we expect that business to start doing ROE at PAT level above our group consolidated numbers?

You see that their PAT is much higher than the group. They are at PBT itself 7.9%, PAT will be—

CSEL.

CSEL you're talking about?

First question, SBPL. First

I'm talking about the SBPL. First is that SBPL numbers are much better than the company performance in terms of ROA, and their NCL is at 2.3%.

More or less, they will be in the range of 2.3%, 2.5% even in the future also because this is a high-yield business. We are actually catering to very small merchant who are into smaller town and where the yields are also higher.

This business is designed like that, and the as of now, the pretax ROA is 7.9%, which is much higher than our expectation. That means they're doing very well.

Now, coming to the stage three number, their stage three number totally depending on the ARC because they don't have SARFAESI. Because the small ticket size, NBFC doesn't have SARFAESI facility, we do it with the ARC, and they work with us, and then they recover it, which is whichever quarter we do it, their NPA goes down, and then it is actually maintained.

We in last quarter, we did, and then next quarter, we will do it. As and when we do it, our collection efficiency goes up because those cases which are already in stage three, you need to do some legal action, and that legal action actually is possible through SARFAESI, which is available through ARC route.

Therefore, we are quite confident that their delinquency level in terms of stage three and the net credit cost is in line with the business plan and they're delivering more than 7% ROA. In fact, they are 7.9% pretax ROA, which is much higher than that, and we will continue to grow it.

In fact, their disbursement growth has been fantastic. They're growing more than 30% growth, which you will see they will continue to grow.

In this quarter, they're again, because of the alignment between the disbursement date and disbursement check clearance, the disbursement was slightly lower. In general, they are doing 30% plus disbursement.

This is from SBPL. In terms of CSEL, they have already improved their ROA significantly, and very soon, you will see that their ROA will be much higher than the company ROA.

That is what we designed the business in the beginning when we thought about it. They are at 3.3%.

This 3.3% was also not expected in the first quarter. We were thinking that they will start hitting 3% from the third quarter.

Luckily, they have reduced their net credit cost by 2% from 6.7% to 4.7%, which is very, very good sign that very soon they will start catching up to 3.6%, 3.7%, and then they will start delivering more than that. Both SBPL, CSEL are high-return and along with the loan against property and affordable housing, all four business are meant for delivering more than the company ROA.

Sure,

sure. Thank you.

Next is Renish from ICICI Securities.

Hi. Am I audible?

Yeah. Go ahead.

Yeah. Thank you, sir, and congrats on a good set of numbers.

Just one thing on the PBT ROTA item which stood at 3.7%, and now, obviously, you all are sounding quite optimistic about rest of the three quarters. Naturally, there are tailwinds also in place in terms of credit cost being lower even in a seasonally weak quarter.

Naturally, second half should be much better. How should one expect PBT ROTA by let us say exit of Q4 FY '27?

This is one of the best questions.

Directionally, obviously, it suggested it should be definitely higher, but would you like to put any number to that?

This is what [foreign language] more.

See,

we have been talking about 3.5% pretax ROA. We should be happy that we have delivered.

It has been delivered because net credit cost has come down, cost of fund is down, the income has gone up. It has delivered because of three different line items supporting that.

Always all three line item doesn't support because of various reasons, isn't it? That is the reason we need to consider some conservativeness in our forecasting.

Why we are saying 3.5%, that's a minimum number we have said, and we will continue to do. At the same time, as I mentioned, the credit cost can improve from here because the first quarter itself, we have delivered 1.5%.

CSEL people

also

want to deliver much better than that. Therefore, there is a scope.

As Arul sir mentioned, this cost of fund benefit of 30 basis point, it cannot be there for full year. It can go down.

As and when—

The CCD conversion will also help, right? So—

CCD conversion is very small, boss. Because I take 2 lakh ₹2,20,000 crores borrowing, it's not a game changer.

Okay. Okay.

What in short, I'm saying that we will try to hold it or try to improve it.

Got it. Got it, sir.

Sir, just last thing on the gold loan piece. All the new products which we entered over last 2, 2 and 1/2 year, I think the strategy or the idea is to generate better ROA, ROE than the console book.

Is it right to assume that the gold loan would be designed in a way that it should generate let us say more than 4% PBT ROTA in a steady-state business?

After 3 years.

We

cannot deliver that number. Obviously.

All other gold loan companies are delivering, obviously, I have given higher target to him, better target. He's saying that we will deliver much better than the incumbents, isn't it?

On par with them.

He's saying on par.

Okay. Hello, I think this is great, sir.

Sir, thank you and best of luck.

Thank you.

Next question comes from Sanket from DAM Capital.

Hi, Kundu sir. I think question was on growth and margins are kind of answered.

Just wanted to see that if in the first quarter you have seen such growth versus what we have seen in the last 2 years where you have been fairly conservative and probably what we are seeing on the credit cost as well. Generally, whenever this happens, next 2 years are likely to be an upcycle.

Do you see that, or how do you see long year on?

It is very difficult to say at this juncture because of these two, three other uncertainties are also there. What you said is right.

After the 2 to 3 years of downcycle, if things start improving, it actually last for another 3, 4 years. That is correct.

That formula has been right so far. We are going through different scenario.

El Niño is there, then you have a war going on, then tariff issue going on. All those things we need to consider.

We are hoping that we should continue to do well what we are doing for longer period. That is the reason one or two quarter I can predict as of now.

Okay. Sure.

Sure, sir. That was the only question.

All the best.

Thanks.

Thank you, Sanket.

Yes, sir. Very good set of numbers.

Next question comes from the line of Subhranshu. Subhranshu, you can ask your question.

Hi, good evening. Thanks for the opportunity.

Three questions. The first one is on the CSEL now that we have knocked off fintech originations.

What are our approval rates and Femi numbers in the new book for personal loans? Second is that now Mudra loans are allowed up to 20 lakhs essentially, they're unsecured loans up to 20 lakhs.

What is the impact that we see in our small ticket LAP or even the home equity business, what could be the disbursement impact there? Third is, in terms of our bank loans, what is the pricing say blended above MCLR?

What are the banks generally charging us? What's the premium above that?

These are my three questions. Thanks.

Starting with the CSEL, Femi rate, it is around hovering around 3%. It continues to be at 3% throughout for last around 15 months.

There is no deterioration on the Femi part. I previously also mentioned that Femi is not the right metric which I track.

I normally track the 6 MOB and 12 MOB criteria. That is showing a much, much improvement after our implementation of credit bureau checks.

Approval rate.

Approval rate is around 35% to 40% for business loan, and for salaried loan, it is around 60%.

Then

on the Mudra loans, the small ticket, in fact, our logins have improved on the small ticket. These borrowers, while they want faster turnaround time and so they want a long-term repayments.

These customers prefer and then kind of distribution we have, we are able to penetrate these kind of customers, and we are not seeing any trend as of now on this segment.

Third one.

MCLR.

Around 25% to 30% of bank loans, which bank loan itself is around 50% of the overall borrowing, it will be MCLR-linked, balance are benchmark-linked. They are T-bill-linked.

What's the premium on the MCLR blended?

We don't pay any premium on MCLR. We take it at MCLR.

Basically borrowing at ballpark 1-year MCLRs? No,

it will be 3-month or even 1-month MCLR.

3-month to 1-month MCLR. Can I squeeze in just one last question if it's okay?

Okay. Right.

Can you spell out our collection architecture? How many people do we deploy in collections and ballparks if it can be given business-wise?

We have around 30,000, but we can't give business-wise.

30,000 people are working, and every business has different different model to basically follow their collection. Good thing about CSEL is that 50 52% collection is happening digitally.

Like that, there are different different way of doing collection. Prashant is doing it, they have a T3 team, one for soft team, one for hard, and then recovery team.

Like that different different team has a different different strategy with respect to the product.

Understood. Understood.

This is very helpful. Thank you so much, and best of luck for ensuing quarters.

Yeah. Next is a follow-up from Viral.

Viral, you can ask your question.

Thanks, Nishant. Sir, just wanted to basically clarify I think with regards to the credit cost for this quarter, right?

We have also seen that the stage two and three PCR has kind of declined sequentially. Is this a function of the texture of the delinquent accounts and the segments also being different and hence the PD/LGD kind of changing, or have we also consumed any part of the buffer provisions?

No,

buffer provision have not been consumed. We have stated that also.

The entire ₹200 crores management overlay is still intact. We watch it, and then take a view on it at the end of this financial year.

The PCR, one thing is, at least in VF, we wrote off some of the 100% provided cases, the PCR will look slightly moderating because of that. Because you're removing the 100% provision under the NPA, whereas the average rate is around 48% out there.

That is the reason why you will see some mild variations in the PCR.

Has there been any change, sir, in the experiential change in the PD/LGDs in any of the segments?

We don't change it every quarter. We do it once in a year.

We do it in December quarter. We used to do it in the March quarter, from last year, we started to December so that we have some runway to make adjustments if anything is required in the fourth quarter.

Got it. Thank you.

Next, we have a follow-up from Piran, CLSA. Piran, please go ahead.

Thanks for the follow-up. Actually, my question is more broad-based on your gold loan business.

Can you just broadly tell us whether we've done some analysis of our customers in vehicles, home loans, etcetera, how much of gold loans they have from the system which we can easily tap because it's a cross-sell customer and how we are really thinking about that opportunity? Or are most of our customers open market?

We are not trying to basically cross-sell with our own business, but we have done the analysis and found that around ₹700 crore, ₹800 crore loans have been taken by our customer across the country. Because our network and number of customers spreaded across the country is much higher, wherein that the gold loan, as of now, we are focusing in a concentrated market where they are opening the branches and totally depending on open market customer.

Correct. To 90% of customer Piran, to answer your question, 90% of customers that we have acquired so far is new to Chola.

Because in gold loan what happens is it need not have an overlap with our existing set of customers because we open branches in places where we find opportunity to lend against gold. Since we operate in a very limited micro market with let's say within 3 kilometers of the radius of the branch, our focus is to entrench deep into that micro market and acquire customers in that micro market.

Yes, is there an opportunity? There is big opportunity to leverage on our existing set of customers, which we are planning to do in the days to come.

Piran, there'll also be the opposite opportunity also. There'll also be the reverse opportunity,

which is,

given that a lot of gold customers are entering Chola for the first time, and the volume number of customers are high, cross-selling into them also over time can be a good outcome.

No, that's a fair point, but then, Vellayan, what's our right to win there for the new to Chola customer? Is he also new to gold loans?

That's what, yeah, that's what we were just saying is— See,

if I do a breakup, okay, of the customers who are coming in, roughly new to gold loan would be about 20%, 25%, the remaining are existing to gold loans. The right to win in that market is typically you look at it, see, Piran, you need to understand one thing.

See, Chola has a brand name. Okay.

We are riding, and in gold loans, trust plays a very, very vital role. We are riding on the trust that customers have on Chola as a brand in that micro market.

See, in this market, see, what I'm saying is if you're offering a more transparent and better experience to customers, because all our journeys are digital journeys that we have currently in all our branches, right? Combined with an experience plus trust, we have a right to win in every market that we operate.

Understood. Our yields would be how much in this business?

See,

I think our yields are on par or slightly, a shade better than our peers in this industry.

Like 16%, 17%, we take it at that sort of ballpark range?

Yeah.

Understood. Understood.

Okay. That was it from my end.

This was pretty useful color, and thanks and wish you all the best.

Thank you, Piran.

Thank you, sir.

Yeah. In the interest of time, maybe we can just take one question per participant.

Raghav, you can ask your question.

Thanks, Nishant. Just one question from my side on your ALM mismatch.

For last few years, we've seen that at a negative 4%, 5%, but when I look at FY '26 annual report data, it seems that negative mismatch has increased to about 10%. Any thoughts on your liability strategy if you would look to borrow more longer term, which may come at a higher rate, but also helps in curtailing the mismatch, or generally if you can comment on how you're thinking about the liability strategy ahead in light of this mismatch and your AUM growth targets?

That's the only question from my side.

Annual report is, that's not a full-fledged ALM. It's a column which is determined by the regulator.

That's what is given there. You will not have the exact ALM.

What you are seeing in the investor presentation is the right one because there is a defined way of presenting it. You will see some differences between that and the statements out here.

There is no mismatches, and you have to look at the mismatches only as a cumulative mismatch. Cumulative mismatch is what matter because in buckets where you have in earlier bucket, if you have a positive mismatch, then it helps to address the negative in the subsequent.

There is no negative mismatch in cumulative mismatch in any of the buckets, and that's been our trend right throughout.

You're saying based on the investor PPT data, there is no negative mismatch, right? That's what you're referring to?

Investor PPT. Not PPT.

Investor deck.

Sure, sure,

sure, sure.

Sure. Thanks a lot.

Maybe I'll come back offline on that. Thanks a lot.

You always refer the cumulative gap, and cumulative, there will be no mismatch.

Sure.

Thanks. Next question comes from Shreepal Doshi of Equirus.

Thank you, Nishant, and thanks for giving me the opportunity. My question was on the gold loan side.

Within that, do we have the vanilla bullet repayment as a product, or do we also have income-generating gold loan products as a product bouquet?

See, bullet or EMI are two options that typically is available in the market at the product level. Whether it is a consumer, if your question is whether are we doing consumer and also income-generating loans?

Yes, we do both. We've just started our income-generating loans recently, but largely, it is consumer loans.

Got it. Sir, in the income-generating loan that you've recently launched, what would be the typical tenures there?

See,

we are looking at a tenure of in the range of around anywhere between 6 to 9 months.

Got it. Will that be the same for consumer loans as well?

See,

consumption loans typically would be in the range of around we've got both 6 and 12 months. Got it.

Got it. I just have one more question, Nishant, if I can just squeeze that in.

It's on the branch expansion strategy for our products like vehicle finance and gold loan. If you could give some highlight on that, sir.

Thank you.

Vehicle finance, we have continuously putting our resident location places. We are already having 600-plus resident locations, and there is a threshold internally we are following.

As and when they start hitting the disbursement number, we start converting them into permanent branches. In general, we have seen that 100-plus

We will be shifting around 125 resident locations into full-fledged branches by the end of this year.

This is the number on an average we are doing it every year. Not only vehicle finance, even for affordable housing, loan against property, they are also moving in the same trend of 100-plus branches at least they are opening it up.

Got it, sir. On the gold loan side, that number would be higher.

Is that a fair like—

Gold loan is specific,

it's

standalone branches. Rest of the people are working together from one premises, but gold loan people are separate.

They are this year starting 360.

We are opening 360 more branches.

Got it, sir. Got it.

Thank you so much, sir, for answering my questions, and good luck, sir.

Thank you. Thank you very much.

That brings us to the end of this call. Thank you, everyone, for joining us today.

Thank you, management, for giving us an opportunity to host the call.

Thank you.

Thank you.

Thank you very much.