Cholamandalam Investment and Finance Company Ltd Q1 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Shreepal Doshi - Equirus Securities Private Limited, Research Division - Analyst : Congratulations on the excellent numbers. So first, wanted to know what is the outstanding restructured book loan? Murugappan Subbiah I mean, restructured book loan? Unidentified Company Representative Yes. The outstanding book stands at around INR 3,500 crores, the restructured book, which was at around INR 5,800 crores earlier. When we did initially, (inaudible).

Question: Shreepal Doshi - Equirus Securities Private Limited, Research Division - Analyst : Got it. And just the second question on the same line. So what would be the right target we would have taken from the restructured pool during this quarter? Unidentified Company Representative The restructured book has shown no stress different from the normal pool. It is progressing in the same way. As you know that we have discussed this earlier also. The moratorium given in the restructured books are very small, ranging predominantly to 1 month to 3 months at most. So the -- all these assets have started being tracked as part of where our normal book itself. And so the Stage 3 numbers, which are already there corresponds with whatever is in the restructured book also.

Question: Parameswaran Subramanian - Macquarie Research - Analyst : I want to ask firstly on the restructured book. So you've classified, I think it's largely in Stage 2. And I think it's largely repaying based on the commentary that you've provided. So how long will we continue classifying this in Stage 2? And do we plan to classify this back to Stage 1 and reverse the 11% sort of provision cover that you have here? That's question one. Question 2 is, again, on the vehicle finance yield declined quarter-on-quarter. Could you explain again what was the reason for the vehicle finance yield declines. I didn't get the part on the marginal book. Are you saying the marginal book yield is lower than the existing book yield. So I just wanted to understand that. And thirdly, I also wanted to understand on the credit cost. What was the reason for the spike in the quarter? And if you could quantify the write-offs in the quarter? Unidentified Company Representative We started moving those restructured books, which have -- which have repaid more than 30% of the original pause. So during the quarter, we have moved around INR 50 crores of restructured book to Stage 1 because it completed repaying more than 30% of the cost outstanding on the data free structure. We will do that every quarter as they repay more than 30% level, which is what is given by RBI as a guidance. The rest of the book is shown in Stage 2. And some had moved into Stage 3. So this is (inaudible) and of course, there are a lot of -- also, around INR 1,500 odd crores have got repaid or settled out. The spike in credit cost, this time is also because for the first time, we have also started providing on the macro factors. So far during the COVID period, but we started measuring the macro impact. Macro impact had been negative. That is -- it was resulting in a reversal of provisions, though we did not take reversals and kept them, we did not provide anything additional. This quarter, what has happened is because of the cost hike and then there are uncertainties, the macro model threw a provisioning requirement of around INR 50 crores, which we have provided additionally as part of the ECL, and that's the reason you see the spike happening. Ravindra Kumar Kundu - Cholamandalam Investment and Finance Company Limited - President, Business Head of Vehicle Finance & Executive Director As far as the book yield is concerned of vehicle finance, before it was 13.99%, and Q1, it is 13.91%. These are in the same level. Before that, in Q3, it was 14.26. So from Q3 -- from Q4 onwards, we started seeing that the new vehicle sales has picked up. So when new vehicle sales pick up (inaudible) actually reduces slightly price. Otherwise, it is almost same level. It has not gone down. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 01, 2022 / 4:30AM, CHLA.NS - Q1 2023 Cholamandalam Investment and Finance Company Ltd Earnings Call

Question: Parameswaran Subramanian - Macquarie Research - Analyst : So 15.4% has gone to 14.9% on vehicle finance income yield.

Question: Parameswaran Subramanian - Macquarie Research - Analyst : Okay. Got it. Sir, just one last part. On the macro provisioning, is this something that will recur quarter-on-quarter? Or is this -- you're looking at more as a one-off for this quarter? That was my last question.