Murugappa group's Chola expects 30% AUM growth next fiscal, bets on EVs

Chennai-based company is expanding EV presence by forming tie ups with original equipment manufacturers

Cholamandalam Investment and Finance Company (Chola) expects 25-30 per cent growth in its assets under management (AUM) for Financial Year 2023-24 (FY24).

The financial services company of the Murugappa group is betting on electric vehicles (EV) and new businesses as key drivers for growth, a senior executive of Chola told Business Standard.

Chola’s total AUM in the third quarter of FY23 was Rs 95,468 crore, up 31 per cent compared to the same time last year. Of that amount, Rs 61,285 crore and Rs 19,997 crore came from vehicle finance and loans against property (LAP), respectively. The two segments contribute to 64 per cent and 21 per cent of the total AUM; they are followed by home loans (8 per cent) and new businesses (7 per cent).

“In 2023-24, we are expecting the overall growth in AUM to be around 25 to 30 per cent. We have already clocked 30 per cent so far this year. During the next fiscal, though it may drop in the first and second quarter, the remaining two quarters will see it picking up,” said Arul Selvan D, president and chief financial officer of Chola.

The Chennai-based company is expanding its EV presence by forming tie ups with original equipment manufacturers (OEM). “We are also working with some of the manufacturers of EVs. We will scale up the tie ups in EVs. Our focus is more on commercial vehicles, as and when manufacturers move to EVs on commercial vehicles, we will also scale up. We are cautious in the segment as we don’t know the life of the product and the longevity of the battery,” said Arul Selvan.

Chola entered new businesses—Consumer and Small Enterprise Loan (CSEL), Secured Business and Personal Loan (SBPL), and SME Loan (SME) —in 2022 but did well in terms of disbursements. Total disbursements in the first nine months were at Rs 9,040 crore in FY23, compared to Rs 1,104 crore in the April-December period of FY 2021-22. Total disbursement from April to December was Rs 45,512 crore, compared to Rs 22,772 crore during the same period last financial year.

In the third quarter of FY23, Chola posted a net profit of Rs 684 crore, up 31 per cent from Rs 524 crore in the corresponding quarter last fiscal Similarly, its total income too was seen up by 32 per cent from Rs 2,547 crore during October to December quarter of 2021-22 to Rs 3,375 crore this year.

“All the segments performed well during the quarter. If you look at it, disbursement growth in vehicle finance was 37 per cent during the quarter and 65 per cent for YTD, LAP also grew by around 36 per cent in Q3 and 78 per cent on a YTD level. Home loan grew by around 99 per cent for the quarter and 80 per cent for YTD. These are the three traditional businesses, which had been clocking good growth in the previous year also,” said Arul Selvan.