Shares of Cholamandalam Investment and Finance Company Ltd. climbed over 9 percent in opening trade on Wednesday after the December quarter earnings of the non-banking finance company (NBFC) beat estimates.
The company said that its net interest income (NII) rose 19.9 percent to Rs 1,812.8 crore in the December quarter compared to Rs 1,511.6 crore a year ago. The figure was much higher than the poll of Rs 1,599.5 crore.
Profit after tax (PAT) jumped 29.8 percent to Rs 684.8 crore compared to Rs 527.7 crore in the year-ago quarter. The poll estimate for PAT was Rs 609.3 crore.
Cholamandalam Investment said that it reported its highest-ever quarterly operating profit during the December quarter.
Business momentum picked up significantly, with the NBFC recording its best loan growth in the last 26 quarters on a quarter-on-quarter basis, while it was the best in 18 quarters on a year-on-year basis.
The company saw loan disbursals of Rs 17,559 crore during the December quarter, up 68.35 percent compared to the corresponding year-ago period and 20.1 percent from the previous quarter.
Cholamandalam’s assets under management (AUM) stood at Rs 95,467 crore, up 31.1 percent year-on-year and 13 percent quarter-on-quarter.
Asset quality, too, improved with the gross non-performing asset (GNPA) ratio and net non-performing asset (NNPA) ratio at their lowest levels in seven quarters.
GNPA ratio was at 5.37 percent versus 5.84 percent in the September quarter, while the NNPA ratio was at 2.76 percent compared to 3.99 percent in the previous quarter.
In absolute terms, GNPA stood at Rs 3,367 crore compared to Rs 3,375 crore in the previous quarter, while NNPA was at Rs 1,988 crore versus Rs 1,975 crore in the September quarter.
Cholamandalam’s provisions for bad loans also fell to Rs 158.9 crore in the December quarter compared to Rs 265.3 crore a year ago and Rs 278.2 crore in the previous quarter.
After announcing its December quarter earnings, Cholamandalam Investment and Finance shares surged as much as 9.4 percent to hit an intraday high of Rs 773.85 on Wednesday.
Morgan Stanley issued an ‘Equal-weight’ call on the stock with a target of Rs 725 per share.
Another global brokerage firm Jefferies, meanwhile, gave a ‘buy’ call on Cholamandalam Investment with a target of Rs 890 per share. It said that the company’s PAT was 17 percent above its estimates due to stronger NII and lower provisions.
