He said, “Vehicle finance will grow better in Q4.” However, he added that the impact on assets under management (AUM) will take time because of the size of the overall loan book.
He said, “One quarter disbursement may not shift the AUM growth that much.” He explained that AUM growth will improve gradually rather than showing an immediate jump after one strong quarter.
He said vehicle finance growth may reflect progressively in AUM numbers rather than immediately after one quarter of higher disbursements.
Cholamandalam Investment and Finance reported profit after tax (PAT) of ₹1,287.66 crore for the October–December 2025 quarter of the fiscal year 2025-26 (FY26), up 18.5% compared with the same period last year.
The company currently has a market capitalisation of ₹1,32,519.13 crore. The stock has gained more than 17% over the past one year.
These are the edited excerpts of the interview.
Q: Give us a couple of data points, then about the disbursement growth, you are indicating that it should pick up in the second half of the year. So, what is the outlook now for the year on the whole? And also, what does that mean in terms of assets under management (AUM) growth?
A: We stick to our original or the earlier indications. You’ve seen that happen in quarter three. Quarter three, you saw the disbursement grow by 16%, and just like how the AUM did not move much when the disbursements plateaued, in the same way, immediately, it will not move much. And so AUM remains at the 20% growth levels, which we have indicated. It will remain so in quarter four also, while disbursement will pick up further in quarter four.
We see better disbursement numbers in quarter four, but it will also not immediately reflect on the AUM. AUM will still grow at 20-22%, which we had earlier indicated.
Q: And the disbursement growth?
A: Disbursement growth would be similar at around 15-16% levels in quarter four as against the previous quarter four, but overall disbursement growth should be in the range of around 10 to 15%.
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Q: Your net interest margins (NIMs) that you’ve reported have increased by close to 10 basis points. That’s something that you were guiding for. It’s got a bit of an improvement, I think, in the home loan part of your business as well. What’s the outlook about your NIMs from here on? And how do you expect your cost of borrowing to pan out in the coming quarters?
A: The cost of borrowing could improve further by around five or 10 basis points (bps), and that should reflect back into the NIMs. We will see similar levels of NIMs as we move into quarter four because the shorter tenor borrowings are somewhat tight.
So there are not that many savings out there. Though we don’t do much of the short-term borrowing, so we don’t see that impacting. However, we will be cautious about committing further on the NIMs, so we stick to our 5-10 bps improvement in quarter four as compared to quarter three.
Q: Your vehicle finance segment, I was just seeing the internals grew at 17%, which is lower than the overall AUM growth. Can you explain that? Because CV markets seem to be doing very well. So, what is the expectation, particularly on the vehicle finance business?
A: Vehicle finance will grow better in quarter four from a disbursement perspective, but the reflection of the same on the AUM will still be a little muted, because it is a very large book, so one-quarter disbursement may not shift the AUM growth that much significantly or instantaneously. So, you will see that growth moving up progressively, rather than having a visible impact immediately for a single quarter’s move.
Q: And for vehicle finance, what is the disbursement growth that you expect in quarter four?
A: The same 16 to 20% growth in quarter four because last year, quarter four was also a better quarter. So, we do not want to look at it from the current quarter versus the next quarter.
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Q: And credit cost was at 1.7% in quarter three. Do you expect it to decline?
A: Yes, it will decline in quarter four, and the overall full-year credit cost should be in the range of around 1.6%, which is what we have guided earlier as well. We stick to that. We will see a reduction in the unsecured book happening. You are already seeing that happening in the quarter-over-quarter (QoQ) numbers.
So, this will further benefit in quarter four. And vehicle finance, always quarter four is a good quarter because that is when there is a lot of money with the borrowers because of the harvesting, etc. So that should also bode well for the loan loss numbers. So overall, for the full year, in spite of the first three quarters being in the 1.8–1.7 range, we still see a 10 basis points (bps) improvement when we close the full year.
Q: The ROA is currently at around 2.4%. Do you expect it to hold at these levels? And what are the levers you have in store to see some kind of improvement in the coming fiscal?
A: In the coming fiscal year, we will see the full-year benefit on the cost of funds happening. The other thing is products which we are now growing are of a higher yield, like gold and even the corrections, which we did in SME, etc, should augur well in improving the bottom line. And so that should help us to improve the return. At a profit before tax (PBT) level, we should be much closer to the 3.5% pre-tax ROA levels, which we had always been working towards. And I think we should reach that in FY27.
Q: Shriram Finance have had a massive equity infusion post the partnership with MUFG. How has it changed the competitive dynamics? They’ve got a rating upgrade as well. And are you looking at any sort of similar partnership or an equity infusion?
A: No, we are not looking at a partnership per se, but over the cycle, as our tier-I capital proportion, if it scales down below a threshold which we have set internally, we will certainly be open to taking fresh equity. But at this juncture, we are not looking at any partnership, because there is a good amount of promoter interest, and they continue to be looking at Chola as one of the prime investment holdings. So, we’ll continue to be in that same position.
For the full interview, watch the accompanying video
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