Cholamandalam Investment - Higher Q3 Provisions Could Get Reversed; Restructured Assets At 2%: IDBI Capital
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IDBI Capital Report
Cholamandalam Investment and Finance Co.’s gross stage three assets increased by 77 basis points QoQ to 3.75% (adjusted for Supreme Court direction) and it was better than estimate.
Also, restructured assets stood at 2% of loan book; lower than guided in the range of 3-5% is the key positive.
Further, Covid-19 related provisions (Rs 7.5 billion as of December 2020) are more than sufficient on the balance sheet and management guided reversal of the same (excluding Rs 3 billion for macro).
Net interest margins improved surprisingly by 50 basis points QoQ led by change in product mix and lower cost of funds.
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