Opening Hook

If you thought NBFC concalls were just about numbers, think again. Cholamandalam (Chola) came to the Q1 FY26 party flaunting its AUM like a gym bro showing off biceps – only to admit it’s carrying a little extra fat in NPAs. While the CFO kept saying “all under control,” investors were busy clutching their calculators like stress balls.

The numbers were strong, the optimism was stronger, and the Stage 3 NPAs? Well, they were strongest of all. But hey, when you’ve been around for 124 years like the Murugappa Group, what’s a few bad loans between friends?

Here’s what we decoded from the hour-long corporate therapy session they call a concall.

At a Glance

• Revenue jumped 26% – CFO swears it’s not accounting magic.
• AUM hit ₹2.07 lakh Cr – clearly, Chola’s hoarding assets like it’s preparing for an apocalypse.
• Stage 3 NPAs climbed to 4.29% – management calls it “normal seasoning,” investors call it “extra spicy.”
• Net Profit rose 21% – because even rising NPAs couldn’t spoil the party.
• Stock reaction? Traders heard “growth,” ignored “NPA,” and went back to memes.

The Story So Far

Last quarter, Chola promised to “drive growth with discipline.” This quarter, they showed up with growth but left discipline at the door. The company expanded its branch network, launched a gold loan business, and pushed AUM beyond ₹2 lakh Cr – because why settle for less when you can lend more?

But the ghost of rising NPAs keeps lurking. From 3.62% a year ago to 4.29% now, it’s like the villain in a horror movie – it just won’t die. Still, the Murugappa DNA means resilience is their middle name. Investors are watching closely, popcorn in hand, to see if Chola turns this into a heroic comeback or a tragic sequel.

Management’s Key Commentary

• On Growth:
  “We are optimistic about the rural demand.”
  – Translation: We hope the monsoon doesn’t ghost us.
• On Costs:
  “Expense ratios remain controlled.”
  – Sure, like my gym membership usage.
• On NPAs:
  “The rise in Stage 3 is transitional.”
  – Transitional to where? Higher levels?
• On Gold Loans:
  “Our new gold loan business is gaining traction.”
  – Because nothing says secure lending like betting on grandma’s bangles.
• On Outlook:
  “We see sustained demand across all segments.”
  – Because spreadsheets said so, and spreadsheets never lie.
• On Competition:
  “We maintain a strong market position.”
  – Translation: We’re still the cool kid in NBFC school, for now.

Numbers Decoded – What the Financials Whisper

Analyst Questions That Spilled the Tea

• Analyst: “Any concrete plan to reduce NPAs?”
  Management: “We have robust risk models.”
  Translation: Pray for us.
• Analyst: “Will rising costs hit margins?”
  Management: “We are monitoring expenses.”
  Translation: They already did.
• Analyst: “Guidance for H2?”
  Management: “Growth will continue.”
  Translation: Don’t quote us on this later.

Guidance & Outlook – Crystal Ball Section

Chola expects double-digit growth in AUM because, well, that’s what the Excel sheet predicted. They see demand across vehicle finance, MSME, and home loans, with gold loans adding some extra glitter. NPAs? They’ll “normalize,” according to management. Because if you say it enough times, maybe it comes true.

Risks & Red Flags

• Rising NPAs – Stage 3 at 4.29% is the red flag investors can’t ignore.
• Rural Demand Dependence – Monsoon plays God here.
• Regulatory Changes – RBI might wake up and say “surprise!”
• Credit Costs – Loan losses up 52% YoY. Ouch.

Market Reaction & Investor Sentiment

The stock moved like it had too much caffeine – up on growth, down on NPAs, then back up because traders remembered Murugappa’s legacy. Meme investors are holding, analysts are hedging, and serious investors are… still confused.

EduInvesting Take – Our No-BS Analysis

Chola is like that overachieving student who scores high but also racks up detention slips. AUM growth is spectacular, profitability is steady, and branch expansion is aggressive. But NPAs are rising faster than fuel prices, and that’s a red flag.

For long-term investors, it’s a play on strong fundamentals with some turbulence ahead. For traders, it’s a swing trade dream – volatility guaranteed.

Conclusion – The Final Roast

In short, Chola’s Q1FY26 was a mix of growth, optimism, and a sprinkle of NPA nightmares. The concall was full of corporate jargon, with just enough truth to keep investors hooked. Next quarter will tell whether this is a disciplined growth story or a risky lending binge.

Written by EduInvesting Team
Data sourced from: Company concall transcripts, investor presentations, and filings.

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