Consumer Finance Sector - Cholamandalam Investment

Cholamandalam Investment & Finance Co. Ltd.

is a useful example for understanding non-banking financial companies. A recent exchange disclosure dated September 26 relates to the allotment of shares, while the broader company story remains linked to its lending operations and expansion of financial services. For an NBFC, investors should track AUM growth, asset quality, borrowing costs, net interest margin, credit costs, capital adequacy and collection efficiency. A rapidly growing loan book is not necessarily positive if asset quality deteriorates. Therefore, the important learning from Chola is to examine the quality of growth, not merely the percentage growth in assets under management.