Cholamandalam Investment Q4 profit marginally up

CHENNAI: Cholamandalam Investment and Finance Company Limited (CIFCL), the financial services arm of the Murugappa Group, posted a marginal 6% rise in fourth-quarter net profit, as lower commercial vehicle disbursements offset gains in home equity business.

The Chennai-based company posted fourth-quarter net profit of Rs 90.73 crore, when compared to Rs 85.76 crore in the same quarter last year.

The firm’s vehicle finance disbursement fell nearly 11% to Rs 2,795 crore in the fourth quarter from Rs 3,140 crore in the comparable period. Commercial vehicle accounts for 82% of the company’s vehicle finance loan book.

"There was a huge supply demand mismatch in the commercial vehicle market which hurt capacity utilisations. We expect the current year to be better than last year in terms of commercial vehicle disbursement," Vellayan Subbiah, managing director of Cholamandalam Investment and Finance, said.

Disbursements at the company’s home equity business grew 23% to 785 crore from Rs 638 crore.

Analysts expect the company’s home equity business to help drive loan book growth.

In a research note last month, Kotak Institutional Equities said the firm’s diversification into home-equity business will boost its loan growth at the compounded annual growth rate of 18% over FY01-17 and share of the home equity in the loan growth to increase by 800 basis points to 35% in FY 2017.