Cholamandalam Investment and Finance Company Limited ($511243)

Good morning, everyone. Welcome to the interaction with management of Cholamandalam Investment and Finance Company Limited. Today, we discuss 4Q FY '26 earnings and management outlook. The senior management is represented by Mr. Vellayan Subbiah, Executive Chairman; Mr. Ravindra Kundu, Managing Director and CEO; and Mr. Arul Selvan, Chief Financial Officer. I would now like to hand over the call to Vellayan for his opening comments, after which we'll take the Q&As.

Thank you, Nischint, for hosting the call, and good morning, everyone. I'm happy to take you through performance for Chola for Q4 FY '26. So first, we will go through the dispersing growth for the quarter. So Chola reported aggregate disbursements of INR 32,913 crores, which represents a 25% year-on-year growth for Q4, which resulted in AUM increasing to INR 2,42,630 crores. AUM growth remained healthy at 21% as at the end of the quarter, reflecting sustained momentum across the portfolio. Disbursements registered strong broad-based growth across all major product segments during the quarter. The Vehicle Finance business reported 36% year-on-year growth in Q4, driven by sustained demand across vehicle categories with auto AUM increasing 18% year-on-year to INR 1,19,558 crores. The MSME segment, which comprises of LAP, SME and SBPL, recorded 11% growth in Q4 disbursements supported by strong demand and robust branch-led distribution. MSME segment AUM grew 29% year-on-year. LAP AUM at INR 52,295 crores growth which is a 26% growth year-on-year. SME AUM is at INR 9,338 crores, which is a 41% growth and SBPL AUM is at INR 3,537 crores, which is a 46% growth year-on-year. The Consumer segment delivered 45% year-on-year disbursement growth, driven by sustained momentum across product segments within newly launched gold loan business disbursing INR 1,130 crores in Q4 FY'26. Home loan disbursements saw mild moderation in Q4 due to procedural timing factors, including election-related administrative slowdowns, land record digitization mismatches and localized lean marking delays in select markets, which temporarily extended verification and dispersal time lines. Consumer segment AUM grew at 20% year-on-year, including 23% in home loans but CSEL AUM increased 4% despite the exit from partnership-led businesses. In terms of profitability, our NIMs improved by 40 bps year-on-year in Q4 driven by a gradual reduction in the company's cost of funds as interest rates softened during the period. Credit costs before management overlay declined by 20 bps year-on-year in Q4 across product segments, reflecting stable portfolio performance. To mitigate any negative impact on credit costs due to heightened global uncertainties, the company has provided a management overlay for INR 200 crores is the cautionary buffer. The overlay addresses potential second order stresses arising from volatility in crude and refined fuel prices, risk of LPG supply shortfalls and supply side pressures and sectors dependent on global shipping and commodity flows, while core asset quality indicators remain resilient. Return on assets for Q4 FY '26 stood at 4.1% before the overlay compared to 3.6% in Q4 FY '25 while return on equity for the quarter was 23%, underscoring improved profitability. We hold a strong liquidity position with a total liquid asset of INR 21,186 crores, which includes undrawn sanction lines. The ALM is comfortable with no negative cumulative mismatches across all-time buckets. Our capital adequacy position stood at 19.21% in March '26, with Tier 1 capital at 14.73%. Out of the total issuance of INR 2,000 crore CCDs, mounting -- CCD is amounting INR 1,370 crores were converted in FY '26. The balance INR 630 crores of CCD is expected to be converted in the first half of FY '27. The Board of Directors of the company has recommended a final dividend of INR 0.70 per share, which is 35% on the equity shares of the company, subject to the approval of the members of the company at the ensuing Annual General Meeting. This is in addition to the interim dividend of INR 1.30 per share -- INR 1.30 per share, 65% for the financial year FY '25, '26, declared by the company on 31st January 2026. Finishing with that, I'll stop, and we'll be happy to take questions from audience.

Sure. Yes, we'll start -- we'll now start with the question-and-answer session. The first question comes from Kunal Shah of Citi.

Yes. So looking at this outlook, no doubt, we have created this overlay buffer. But if you can guide in terms of how we are looking at the trajectory getting into FY '27 and both with respect to AUM growth as well as credit cost, if you can indicate in terms of how the outlook will be? And anything particularly on the Vehicle Finance side or any of these segments wherein we would have tightened the credit filters or improve the screening out there, how we are incrementally looking at these segments, yes?

So first of all, the credit filter side, I would like to mention that we have been continuously working to improve the Gini coefficient of the underwriting tool, working for the all the division. So that will help us to improve further improvement in credit cards. For this financial year, we are still holding our growth trajectory between 20% to 23% what we have been committing. And we are still hoping that our net credit cost will go down from 1.6% pre-overlay to 1.5%, and our ROTAs should improve then closer to 3.5% pretax ROA, which we have been discussing that.

Okay. Got it. So you mentioned like in terms of the credit filters, we have -- sorry, I didn't get that exactly.

We have been working on the improvement of underwriting tool, which is a Gini coefficient, and that is actually decide the accuracy of decision taken by us. We are working along with all the current managers of the company for each division to improve that. That has been there for last 1 year, and that has actually helped us to improve quality of the CSEL, CD and the Vehicle Finance during the quarter 4 and which is going to be continued even in this financial year.

Okay. And that should help the overall credit cost trajectory of 1.5-odd percent?

Yes, it should help us to get that number.

Okay. And no need for any further overlay. This doesn't include any overlay buffer as such. We believe like INR 200-odd crores, which we have done, that is sufficient enough taking into consideration the current dynamics, which are there?

Yes. It is more a precaution considering will there be any heightened credit costs for the [indiscernible]. So as we for talk now, there is no [indiscernible] for anybody.

Raghav Garg of AMBIT, you go next.

Okay. Am I audible?

Yes.

Yes. Okay. So I just want to understand, see for April '26, these 2 key OEMs, Tata and Eicher have reported fairly good growth in their CV volumes. Now should that be taken as a proxy for how the on-ground sentiment is, amongst the CV operators that despite the war and despite the disruptions that have been there domestically, they are still going out there and buying trucks because they see the good demand for transportation? Or do you see some risk to CV sales momentum sustaining in the near term or even in the medium term? And that could be a risk to your growth guidance or estimate. That's my first question.

Yes. See, not only Commercial Vehicle segment, is -- passenger vehicle also has shown the good number in the month of April. And we have been -- we have got the opportunity to see our number also. So our number with respect to sales, credit, collection as compared to the April 2025 has been very good. So as of now, the on ground, any -- we have not seen any change in behavior.

Understood. So what you're essentially saying is that despite all those disruptions and the narrative being that there is a lot of risk and I think rightfully so, you've also taken some management overlay. There is nothing on the ground at least in terms of data that would suggest that things are deteriorating. Is that understanding correct?

Absolutely, absolutely. That is correct.

Okay. My second question is that for FY '26, can you give me the total recoveries cost? This same number in FY '25 was INR 441 crores, what was this number for the full year FY '26? And then I have a follow-up question on this.

So maybe we'll come back after seeing the number. And then you also ask the question, once we will get [indiscernible].

So what I wanted to ask is that typically, what we've seen is that in years when there is asset quality paying the recoveries, cost grow at a higher rate versus say, the overall business growth or the overall OpEx growth. I am assuming that it would have been the case this year also, but with the asset quality improving in FY '27, your recovery cost growth should be much lower or it may not increase at all. Could that be one of the levers to your OpEx ratio improvement next year? I just want to get your thoughts on this.

Yes, I think you're asking about the collection cost in terms of percentage to the asset. And if you see that the collection cost is a part of the total operating expenses and total operating expenses has been fairly at the same level. It is at 3.1%, compared to last year of 3%. So nothing has gone up in the operating expense, in spite of we have opened up gold loan business and also we expanded in consumer durable. That shows that the recovery cost has not gone up. Recovery has improved because in the quarter 3, quarter 4, we have seen that capacity utilization has improved. And also, we got the opportunity to get a resolution through surface in the [ mortgage ] side. So both put together, the collection efficiency has improved. Another important thing we have been continued saying that our Stage 2 has been improving throughout the quarter 3, quarter 2 onwards. That shows that the -- in general, the customers' payment -- repayment capability during the year for the customers who are in 0 to those who are in 31 to 60 and 61 to 90 were actually good. And the other reason is Stage 2 has come down. And finally, Stage 3 has also improved in last quarter.

Understood. Do I have opportunity for one more question or...

Please, go ahead.

Okay. See, when I look at your total gold loan AUM and then when I divide that by the total active customer base in the gold loan segment, that comes out to be some INR 5 lakh, INR 6 lakh of exposure per customer. I just wanted to get some sense on what kind of ticket sizes you are doing in gold loan segment? And what kind of yields are you charging to customers? I just want to get a comprehensive color on the kind of customer segment that you're targeting? And how are you positioning yourself versus the other gold loan NBFCs?

Yes. So if you look at it, our average ticket size for a loan in Q4 has actually come down from -- when we started, it was around INR 3 lakhs. Now it has come down to INR 2 lakhs. So we are getting more granular in terms of our acquisition strategy. So yes, I think in gold loan, typically, what happens is that a customer takes more than one loan, right? So typically, when you look at the total customer exposure, it could anywhere vary between INR 5,00,000 to INR 600,000 per customer. But in terms of the average ticket size, at INR 2,00,000. Now coming to the...

Are you saying that even your customer would have around 1.5 to 2 loans? And the for total, exposure would be INR 4 lakhs to 5 INR lakhs?

Yes. Okay. So as I -- as I mentioned, as we have always been maintaining, our yield also has been very, very healthy as compared to our peers.

So ticket size is INR 2 lakh now. It had started with INR 300,000, it has come down. And yield has gone up to now 15 also.

So the yield is also very, very -- pretty strong in terms of -- it's pretty healthy as compared to our competitors. So if you look at our strategy is to get as much granular as possible, get into more of the retail customers, and we have been successful in doing that over the last 9 months of operations.

Viral from IIFL, you go next.

Congrats on a good set of numbers. I had 2 questions. Sir, one is on the CSEL piece. When I see our segmental numbers, I think we are now starting to see a genuine turnaround, I would say, on the asset quality as well as I think we are getting our growth over here. Can you just highlight what is now incrementally you are looking at this segment in terms of, say, the growth potential, number one. And number two is, I see that the expense or the OpEx levels also have gone up in this quarter. Where are we investing in terms of distribution, which product segments? And what can be a steady state and ROA outlook for, say, FY '27 and '28 in this segment? And whether it will be to what degree and extent ROA-accretive? So that's my first question, sir.

So CSEL now is -- has got 2 businesses. One is unsecured personal loan, business loan and professional loan, one side. Another side is the CD, mobile lending and also deal to customers which is online in-house fintech. So these are the 2 businesses we are doing it. You have seen that our loan losses has come down to 5.2% in the quarter 4 and that is going to continue to further improvement. So that's the reason, if you take a 2.3% ROE of the quarter 4, it should definitely cross 3% ROA -- pretax ROA in the financial year, which is going to be due to further improvement in the loan losses and also -- the NIM also should improve because of the consumer durables also growing. That is the one thing. In terms of growth, the disbursement growth has been 39% in quarter 4, which is going to be continued because quarter 1, quarter 2, we had low base benefit. The important is the asset growth, which is now just started to grow, so it is now at a 4% level. We are expecting that by the end of this financial year, the CSEL, both put together unsecured PLBL and professional and CD and digital and mobile, put together should be at least in the quarter 4, we are expecting that to start hitting 20% asset growth. Operating expenses is basically high in the quarter 4 because CGTMSE insurance, we have paid. And now in this financial year also, we are going to pay, which is going to get distributed over the -- across all the quarters. So this impact of 6% will not be there. It will go down to the level it was 4.5%. So that's how we are expecting that there's going to be improvement from operating expenses as well as the net credit cost, which will help to increase the ROE from 1.6% of this financial year to 3% or more.

Got it, sir. Very clear. And just as, I would say, extension to your response, you mentioned that you have paid premiums for the CGTMSE in this pool. So what percentage of our PL over here will be covered by this insurance?

As of now, we have covered around 70 percentage of our assets. And we continue to improve that. Probably, we may go up to 80%, 82 percentage. That is what our plan is, to cover the asset in unsecured business.

Okay. And this will be around INR 10,000 crores, INR 12,000 crores asset, right, in the ex of CD business?

It will be around -- it is only VL portfolio that we are going under CGTMSE and it will be around INR 3,000 crores to INR 3,500 crores.

Yes. So as I mentioned that it actually includes PL VL professional in one side, and other sides, CD, mobile and D2C. So the VL part is actually INR 5,000 crores. Isn't it? Of that, 80% is around INR 3,500 crores.

Got it. Sir, very clear. And sir, my -- the second question is with regards to on the asset quality front in April. You did highlight that you are not seeing anything, say, from a customer or the borrower behavior. If you can just throw some light in terms of how are your bounce rates trending? And is this basically across the segments, vehicle finance and also the home loan, LAP? If you can just give some color over there, qualitative as well is okay.

See, the most -- biggest benefit has to come from Vehicle Finance, isn't it? So I think Balraj is the right person to talk about it, what he has seen actually in the month, of this rate.

So we have just closed April. 2, 3 things. The early defaults, nonstarters compared to '24 April, '25 April, we are much lower in the month of April '26. Even this is almost at par with April -- March '24 and '25 numbers, and we have not seen much of a deterioration. Normally April -- March to April, there is some level of deterioration. But this month -- this year, it has been better. The second thing, even in the first cut, NCL numbers are lower than last April. That's what we are.

The next question comes from Abhijit from Motilal Oswal.

Thanks, Nischint. Sir, just on the ROA -- I mean, last 2 years, I think, you will also acknowledge has been particularly tough, especially from the Vehicle Finance side. Balraj sir just mentioned that in April 2026, nonstarters have been much lower than what we saw in April of last 2 years. So just trying to understand versus ROAs of 2.3%, 2.4% that you've seen in the last 2 years. You'll remember when we had started these newer business lines, the whole idea was to get to better ROEs over a period of time. I acknowledge last 2 years on the NCL line has been higher. Now I mean, when you said that this year, FY '27, we should look at a credit cost of 1.5%. Just trying to understand which segments vehicle being one. CSEL, you'll remember last year, we were incurring higher credit cost on that book, which was originated through fintech partnerships. So just trying to understand, I mean, what all levers will we have on the ROA tree, which can lead to an ROE expansion this year or next year?

Yes, this is Arul. So what will happen is NIMs will hold at same similar levels at around 8%. What will happen is the newer businesses will give better yield, but that may get offset on a conservative basis by a slightly higher cost of funds that may happen over the full year of FY '27. So I'm looking at 8% NIMs to go hold because of these 2 combinations. OpEx will be in the range of around 3% to 3.1%. So that would more or less remains same. The savings will come from NCL which will come from vehicle finance as well as CSEL, as you rightly said, these 2 coming through. We'll get you the 20 basis points comparison. Today, we are at 3.3% after considering management overlay of around 9 bps. So that if you remove, our current NCL is 1.6%, even if we do 1.5%, we should be easily at the 3.5% pretax [indiscernible]

And sir, while you are here, I just wanted to understand, I mean, what will be the approach to ARCs in the coming -- basically trying to understand this SBPL book that we have, that is not something that we can apply [indiscernible]. So what will be the approach to ARCs in that business?

Our focus would be to use ARCs wherever we are not able to [indiscernible] which is any loans, which are of less than INR 20 lakhs number, whether it is from home or SBPL or -- these are the 2 broad businesses, SME and the ticket sizes are larger. So they will certainly [indiscernible] they may not go for the ARCs in that context.

Got it. And last question is for Ravi sir. Just trying to understand within the vehicle financing book, various subsegments, I mean, you mentioned earlier, April trends are looking good but are there any product subsegments or geographies where you are seeing anything unusual? Or everything is as per expectations. And till now, we have not seen any impact of the war.

For last 3 years, we have been going through the problem, either from the geography point of view or the product point of view. And that is why we were saying always that it is down cycle of vehicle, and that is what impacted the vehicle sales, whether it is a small ticket sales loan like the Tata type of vehicle, which is a small commercial vehicle or light commercial vehicle, even heavy commercial vehicle. So all segments got impacted. And from Q4 onwards, it has started improving. Now even in the month of April, we see that the demand for the vehicles are still holding. And as Balraj mentioned that, all the delinquency with respect to the early default nonstarter -- with respect across all product segments, things are looking better. So it's going up the cost. We have been saying that we will gain a little bit market share also with -- in the Vehicle Finance because things are looking better in the last year, we said that. So it is continued and I will say that last year, when we started, we were having 3 engine of Chola; LAP, SBPL and HL. They were driving the growth. Now all 8 engines are driving. So that is what is our comfort level. And we are diversified. Within Vehicle Finance, we are diversified. Within Chola, we are diversified in the geographic point of view, and that will take care of the uncertainty which is there in the market.

Next question comes from Deep of Bandhan.

Am I audible?

Yes.

Sir, one quick thing. We are at around 6.94x gearing and guiding a growth of around 20% to 23%. So any sense, sir or clarity on when will we raise some capital if needed? And I mean how -- I mean not on the quantum, but any time lines for those because I think we have -- I mean, 19.2% is our capital adequacy ratio. So how much of this will be -- I mean will we consume some amount of capital for growth this year as well or our internal accruals will be sufficient? Any clarity, sir, on this part? And sir, one follow-up on this is that any internal policy or something that we have in mind, I understand that we have been reducing gearing from 7.1x -- 7.17x last quarter to 6.94x currently. So sir, any internal policy or any guidance that you would like to give for the gearing ratio?

See, we more actively follow the capital adequacy ratio. And we have given guidance there that if the Tier 1 ratio comes to 13, we will certainly start looking for equity. And in a situation where we are returning a 3.5% pretax ROTA and growing less than 23%, 25%, we should be able to be self-sufficient in providing capital. This has been our stated way of looking at capital requirements. Having said that, if there is good growth opportunities, we will certainly look at bringing in additional capital to strengthen the growth. This will be done in consultation with promoters and other senior people in the organization. As we move forward, evaluating the market situation as well as the growth potential. So -- but the stated policies I've already given.

Okay. Sir, and one more question. I understand we are AA+ positive from ICRA and AA+ as stable from all other rating agencies. And I mean, sir, any initial talks, what they have been saying to -- I mean to take Chola to a different level from AA+? So any steps that we are following there? Or I mean, in such scenarios, I mean, anything that you would like to highlight on that part?

No, we are in discussions with them, and we will keep evaluating. But as you know, it is not like a given formula that you will reach certain numbers, then they will automatically give you. It's in both qualitative as well as a quantitative approach to the rating approach. Many of the other competition is getting the triple AAA leveraging parental support, et cetera. But unfortunately, we cannot do that because there is not any dependence of any of the parent organizations on Chola for the funding requirements, et cetera. So that being the case, we continue to be AA+ from that item.

Sure, sir. I understand. I mean the positive trigger is also a qualitative one.

Next is Abhishek from HSBC.

So just a few questions. First, on vehicle loans this year, what is the disbursement and AUM growth that you're looking at?

So Vehicle Finance, we are expecting to continue the project where we are as of now in quarter 4. So that is coming to around 15% to 20% disbursement growth and around 18% asset growth.

Okay. And considering that there might be some disruptions, even then you're confident that you can do this level of growth in vehicles this year?

Yes. That is what Balraj is committing.

Got it. Right. The other question, the Fintech book, how much of it is left to run down now?

INR 300 crores to INR 400 crores, but this will be a little long tail because it will run through the entire year because these are the left out beyond 1 year type of...

Okay. Yes, but it's quite negligible that way. Okay. The third thing is, in the overlay provisions that you have made, have you changed any PD-LGD assumptions? And does the run rate credit cost change? Or this is just a onetime activity and you go back to the run rate credit cost?

No, PD-LDG, we have not changed. If we change PD-LGD, then there is no over [indiscernible]. The overlay has been arrived and based on past experience of similar situation when COVID and the diesel prices went up and how the delinquencies have sort of panned out at the time. Similar approach we have taken to look at what should be overlay and arrived at this overlay. So there's no change in the PD-LGDs.

Got it. Yes, because some other NBFCs are having to gain some of these core assumptions. So nothing like that, right? The ECL model remains.

Abhishek, PD-LGD is based on past experience and past data. I can't change the data for the past period. The past period gives me a PD-LGD. There are 2 options to do it, one add to the macro or add it as an overlay. The macro information available is again, citing a much better GDP growth and much better forecast because this was done pre the IMF macro data that we rely on has come pre-February before the war. That is why we said we will consider -- what should I say, events that happened post-February to factor in this.

Got it. And CGT SME -- MSE, the cost for this quarter would be roughly around INR 40 crores?

Yes. Around INR 35 crores, INR 38 crores.

Perfect. Just one last quick question on HL yields. Now that inter-quarter movement is because of assignment and upfronting of income? Or is there something else?

Assignment income is not given credit into the -- respect to business portfolios. That's separately shown. And we have not assigned any HL book also incidentally, there's more some of the portfolio.

Arul, this 50 bps jump...

Primarily coming -- is coming from the ARC accounting where ARC amount is shown as income and then the NCL is high. These two nets of overall ROTA remains. It has given us the bottom [indiscernible].

Page [indiscernible] is there. 0.39% is the NIM gone up because of that.

Piran from CLSA, you go next.

Congratulations team on the very strong set of numbers. Just firstly, what would it take for home loan disbursements to pick up? It's been in this INR 1,800 crores, INR 2,000 crores range for now 7, 8 quarters.

So the point here is no, as of now, we maintain a steady growth rate of 23% on the book. We see this Q1 should be slightly better. And last year, Q3, Q4, we have seen the incremental numbers. We crossed INR 2,000 crores also in Q3. So we expect this year, we should be clocking in 12% to 15% disbursement growth, and we made a steady growth on AUM side around 25% plus.

But sir, why has it been lagging? Like, what will change next year for growth to pick up to 15%, if I ask it that way?

Yes. So this is basically when we started disbursement 4 years back, our penetration was only in South. So all the scale up since the last 3 years have come to pan-India presence. So the branches we have added has started kicking in value. So the proportion of South is continuously coming down. And the other areas of India, we are managing it good. So we see the incremental business coming from other locations in terms of productivity hike and also the branches are getting mature. So next year is the year where our disbursement will scale up, the efficiency will go up and we'll maintain the ROTA of 4.2% plus.

See, one thing which I mentioned in the note itself, in the beginning, Chairman said that there has been some delay in completing the documentation due to the election because there are 2 states in the south, elections are going on. So that has actually reduced the -- both the disbursement of LAP and HL. But that is not impacting the overall asset growth. We are quite confident that we will be clocking 25%-plus asset growth in the HL and LAP and as well as there are 2 more mortgage businesses we are having, SBPL and SME. There, the growth will be higher than 30%. So put together, the mortgage business growth is going to drive the overall growth of the company and new businesses like CSEL, CD, gold are also supporting that. That's the reason we are saying that we are quite comfortable in holding our commitment of growth of 20% to 23% for a company level.

Understood. Sir, secondly, on Vehicle Finance, I just wanted to understand, let's say, fuel prices go up 10% tomorrow. How much do you need to increase freight rates to offset that and maintain steady profitability per truck?

See, there are 2 type of customers. One is the -- and especially for the heavy commercial vehicle segment alone. One is that heavy commercial vehicle segment in our business is only 5% to 7%, which is a very small percentage. Rest of the businesses are small commercial vehicle, light commercial vehicle, passenger car, construction equipment, where the fuel doesn't impact much. It impact only the heavy. And within the heavy, it impacts only the long-haul transporter who are burning more diesel because they run, say, 300-kilowatt on an average in 20 days, they will run for 6,000 kilometers and fuel efficiency is 3 kilometers per liter, then they will have to buy 2,000 liter. And if the diesel prices goes up by INR 20, which is 20% or maybe slightly higher than that, 25%, then they will have to spend INR 50,000 extra. Now total income after paying all kind of thing in the long-haul transportation is INR 1 lakh. So that INR 1 lakh, even after 25% goes up, they will actually have a saving of INR 50,000. That will impact their standard of living definitely, but then it doesn't impact the EMI payment and other repayment. That's one. So that is applicable for long-haul transporter. Long-haul transporters are fleet operated. We are into the small road transport operator who are operating within the city or within the state. So therefore, passing on the freight, which actually increased diesel prices is easy for them. Those who are working under contract, large fleet operator with the contractor or low load provider. For them, it is not easy immediately. So what we see that actually because of the heavy commercial vehicle portions are very small for us and also more SRTO, diesel prices increase will not have very highly impact. Our problem is demand. If the demand is there, the load is available, then it will be easy for everyone to pass on the price.

But one fundamental question, why will fuel price not impact LCV operators? Is fuel cost a smaller proportion of the revenue than for heavy...

They are not running 6,000 kilometer. Their run is the small, the small lead they run. And also market load operator, they take load from the open market and they pass only...

Daily pricing, it's like a daily pricing.

It is a daily pricing. It is not a fixed pricing, which you have to work out in a particular way.

Yes. In heavy, the buyer of kind of logistics has much more cloud. [indiscernible] business is predominantly [indiscernible]

Okay. Fair. Just secondly, and this is probably very qualitative, but which of the end segments are more price sensitive or price elastic as in, for example, if freight rates go up 20% tomorrow, where will we see a drop in demand because of the freight rate rise? So for example, if I'm shipping iPhones and my -- and the freight rates go up 20%, there's obviously not going to be a drop in demand because the freight cost is a miniscule proportion of the iPhone cost. But there will be many other sectors where this would lead to some sort of elasticity of demand. So if you could just maybe touch upon this qualitatively, that will be useful.

See, actually, what you're saying, the freight goes up. Freight goes up only when the demand is there. The demand is there, freight cannot go up. Isn't it? So that is what is the basic thing. If there is a demand, if the loads are available, the only transporter can ask for more freight, that is the point one. Point number 2 is that the transportation cost doesn't impact the demand. It is actually more their inflation. If they have ...

I think Piran's question is on end segments, right? I think. Your answer actually -- your analysts, colleagues in other sectors will be able to give you the best answer because basically, the data point you need, Piran, is what is logistics costs as a percentage of the overall revenue associated with the product, right? We know there's sound heavy -- now we know that in some heavy infrastructure sectors, logistics cost can be as high as like 22% or even like 24% of total cost structure. So obviously, those -- and I think you -- I mean your analyst colleagues will easily be able to give you that breakdown, and that analysis is fairly simply available as to what is logistics cost as a percentage of overall cost of the sector. But I think broadly, we know, right, that the heavier infrastructure sectors had a higher logistics cost as a percentage of cost of revenue.

Yes, we have a large participant list for questions. So my suggestion is just to keep it brief and maybe 1 or 2 questions. Shubhranshu from PhilipCapital next.

The first one is the growth number that you gave, that's on the disbursement. So if you can split this number into a business-wise, I think you've already given for Vehicle Finance. For rest of the businesses, if you can split this growth for '27, what kind of growth we can look at for each of the businesses? Second is how many people do we deploy in collections? And again, we can split that business-wise?

Shubhranshu, I can't give you business data. These are not -- we have given a lot of data.

At least the total number of people in connection, sir?

The number of people we can give you. That is around 30,000 we have now on collections. That is there. But independently, each business-wise is very difficult to share because that's not probably clear.

That's fair, sir. I'll take it offline. The first part of the question, sir, the growth numbers.

Growth numbers also, we have given you AUM growth. AUM growth, we have said it will be between 20% to 23% as we have talked about earlier. And independently, I think Vehicle Finance, we have said 18% growth. LAP and HL will be growing in about 25% to 30% level. The rest of the business, which are new because the [indiscernible] will actually clock a larger percentage, but the overall number would average out to the 20% to 23%, I spoke about.

Right, sir. And if I can just squeeze in one last question, sir. If I look at the LAP PBT as a percentage of total PBT, sir, it's roughly at around 30%, 31%, which is quite high versus the rest of the previous 5, 6 years, sir. Earlier, it used to clock anywhere between 19% to 22%, and this is a huge spike. So any reason it is here or we are likely to see this come off? If you can elaborate on that, it will be great, sir.

No, they have been growing their book quite decent growth and the cost are also low. So that's good, and we are quite happy about that, and we'd like to continue that.

It will stay at around 30%?

Yes.

Nidhesh from Investec, you go next.

Sir, my question is on branch addition. What are the plans to add branches in vehicle, home equity and home loans in FY '27?

The point here is we already have the vehicle finance branches. The only for us, is the extension of putting manpower. We are planning around 60 new branches in Q1 and Q2, 40. So 100 branches in Home Loan will be in the next financial year.

These will be shared branches of Vehicle Finance. Unique branches would be the gold loan branches, which should be in the range of around 300 plus.

Will always be part of the [indiscernible].

All the other businesses would mostly be in the vehicle finance branches. Vehicle finance branch by itself would go up by around 100...

Basically for the other divisions. It's deployment of manpower in the branches, which will create the new branch.

100 in LAP?

100 in VF and then probably 300 in gold, that will be the branch addition?

100 in VF where other branches or other will also start participating. Each of them would start participating in existing VF branches and their growth, like what Prashant said and Suresh, they will start operating out of existing VF branches where they are currently not operating.

The count would be 100 in HL and 100 in LAP.

100 in HL Yes. So those add up all the numbers to arrive at the total number of branches for Chola. That's what I was trying to say.

Sorry, just a clarification, gold branches addition is 300. And what is the current base?

Gold loan is adding 360 more. Today we are at 120. 120, [indiscernible] 480 HL will increase 100, LAP will increase 100. Similarly, CSEL and CD are also likely to increase 100 branches. SME is going to go move up quite roughly.

And gold tends to be exclusive, right? I mean there is no sharing of branches.

Gold will be exclusive, rest of them will [indiscernible]

The next question comes from Shreepal of Equirus.

Congrats on a good quarter. My question was on Vehicle Finance front. So within that, HCV has seen a very strong growth this quarter. Are we seeing similar trends in April as well? And how is the competition from banks in this particular segment, especially on the newer side?

As of now, in the month of April, we have grown across all the segments. We have grown in passenger vehicle, we have grown in 2-wheeler, we have grown in heavy commercial vehicle and LCV. Across the product, we have seen and we have been able to increase our market share.

Okay. And on the competition from bank, if you could give some color there?

As of now, since we have grown...

We have not seen that, [indiscernible]. It is similar level at where it was.

Okay. Got it. And sir, is that a trend in the newer segment as well? Because I mean, PSU banks who were hurt, they've become very aggressive in that particular segment. So we are not seeing any thing for us?

They are into passengers.

We are not seeing any significant shift in the competition behavior in the last 4 to 5 months. And in April also, there has not been any changes.

So apparently, as per CMI data, freight rates have already gone up in April versus March? And apparently, some of the data suggests 10% month-on-month growth. So is this something which has to do with demand? Or is it something in anticipation of fuel prices?

Demand. As of now, diesel prices are at same level.

Demand has been strong in April. Yes. Sorry, I'm not sure if you're audible. You're saying demand is strong in April.

Yes. Demand has been strong in April. The prices have not gone. So fuel prices cannot be the reason for increasing the freight.

Got it. Yes. So this was the last question. We don't have any further participants in the queue. Anybody who wants to ask a question can raise their hand. So I think, yes, that's it. We are done. Thank you very much management for giving us an opportunity to host the call. Okay. We have a question from Harshit. Can we take that? Harshit, you can ask a question.

Sir, the question was on the cost growth itself. So when we look at FY '26, our employee cost was around 27% Y-o-Y. But going forward, obviously, we want to invest in gold loan and we want to invest in newer businesses. But how should we look at the overall cost growth versus the AUM growth? And yes, I think on a net basis, should we -- should it now start tracking AUM growth or we should start getting some operating leverage out there?

I think it will take another year or so to get any operating leverage because we are adding new branches for most of the business, we just spoke about it. So we will still continue to hold it at the 3% overall to the average assets. That's what we -- so sometimes we are higher at 3.1% [indiscernible] but I think we should work at that. Right now, I wouldn't want to factor that...

Got it. The idea was to just check because given -- in gold loan assumption was that typically the breakeven periods are shorter compared to non-gold loan business.

There is a large amount of capital [indiscernible] as these are exclusive branches and then people have to be recruited -- and people have to be recruited. Unlike vehicle finance, it will not be people who are new or raw, we need to bring in experienced people from gold loans, et cetera. [indiscernible] There are other initiatives on the IT side, which is on the AI side, which is also bringing in larger costs. So I think let's not count too many now ahead of what we are.

We will take the last question from [indiscernible] Chawla.

Yes. So as we have seen new business part or CSEL, which we were struggling with respect to asset quality and all are doing good now. We are confident on that. Vehicle financing was some bit of a pain in terms of asset quality. That is now out. And growth, we are very much confident in vehicle financing. And already, we -- in terms of [indiscernible] crisis, if you are seeing, you are saying already, we have an overlay of INR 200 crores on the credit cost per se. So then we are still guiding for credit cost as a whole from 1.6% to 1.4%. If we go with the history, we have been in the range of 1% to 1.4%. So what still -- getting us to still give a credit cost guidance of just 1.5%. We can easily touch 1.4% with respect to history. So what is that creating us back? Or are we being conservative in that sense? If you can share some bit of a thought process on that?

See, 1.5% is the idea for this year. So from 1.5%, if we get it, then again next year, we have to reduce it to 1.4%. So every year, we have to improve upon. So we don't want to take more target from you all. You have to achieve every year. Let us see that how much we can do this year. And based on that, we will try our level best to do the -- across the future. CSEL has started just improving. Another thing is that we need to understand the high-yield business, which is CSEL, CD, then digital as well as mobile. All are having a little higher net credit cost by design. And if they are growing, then that higher credit cost also will be there. At the same time, mortgage businesses are having a lower credit cost. And then we have Vehicle Finance, which is an average. So all 3 segments, we need to look into it and then arrive at an actual credit cost, which is going to be standard for us. Like in the past, it used to be 1% to 1.2%. We need to define that. But that can be defined within next 1, 1.5 years or 2 years down the line once [indiscernible] are set. As I mentioned, all businesses started doing well. If we work for another 2 years, we will come to the conclusion that what would be our future ROA and what would be our future NCL. As of now, let us actually hold it at 1.5% for this financial year. We will try to do better.

Perfect. That was the last question. Thank you very much for joining us. Thank you, management, for giving us an opportunity to host the call. Thank you.