homefinance NewsMurugappa group auto financier eyes an upcycle in CVs as India gears up for festive season
Murugappa group auto financier eyes an upcycle in CVs as India gears up for festive season
Cholamandalam Investment share price: The Murugappa group company expects its asset quality to return to pre-COVID levels by March 2023.
Cholamandalam Investment — a Murugappa group financier of vehicles and homes — is betting big on a pickup in the country's commercial vehicle cycle following 3-4 years of contraction. The segment is long overdue for an upcycle, Cholamandalam Investment President and CFO Arulselvan D told CNBC-TV18.
“In a normal situation, the subsequent upcycle will take it beyond the levels touched earlier, expecting that it will happen in the coming year,” he said.
Optimistic remarks from the management of the Chennai-based non-banking financial company come at a time when investors are pinning hopes on India's upcoming festive season — which typically boosts demand for loan products as consumers line up their purchases of automobiles.
Arulselvan also said the new segments of the company — consumer and small enterprise loans, small business personal loans and MSME loans — are growing well. “In Q1 (April-June), they were in the range of around 3-4 percent (growth) and they will move over the next few years subject to our comfort," he said.
The Cholamandalam management is hopeful of scaling up these segments to around 10 percent.
The company's new businesses have started to contribute to its total assets under management where the contribution for the June quarter stood at four percent of the total portfolio, according to KRChoksey. The brokerage expects the contribution to improve to 12 percent by the year ending March 2024, aiding the the overall AUM growth as well as earnings.
Arulselvan also said that rainfalls leading to mine shutdowns typically make the July-September period a bad quarter. However, he expects Cholamandalam Investment to be on a much better footing in terms of asset quality — or the proportion of bad loans in total loans — from the December quarter.
The company expects some improvement in the September quarter, leading to pre-COVID levels in the next three months, he said.
Cholamandalam Investment shares have declined 1.3 percent in the past one month, in line with the Nifty50 benchmark.
(Edited by : Sandeep Singh)
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