Cholamandalam Investment reaffirms 20-22% FY26 growth outlook, sees shift back to new vehicles

Cholamandalam Investment and Finance has reiterated its full-year growth guidance of 20-22% for the fiscal year 2025-26 (FY26), with President and CFO Arul Selvan outlining expectations for the vehicle finance market and the company’s broader lending portfolio.

Speaking about the recent rise in certification costs for older commercial vehicles, Selvan said the impact on Chola’s business is limited. The fee is mainly relevant for resale, he explained, and remains small relative to overall vehicle prices. “It will not be a large differentiator in my view,” he said, adding that any funded amount “gets amortized over the loan tenure.” He also noted that Chola is less exposed as it finances first-time resold vehicles that are usually seven to ten years old, where the fee increase is smaller.



Selvan said he expects a shift in customer preference back toward new vehicles. The price gap between BS-IV and BS-VI models, which had driven demand for used vehicles, has narrowed. “The quantum of BS-IV vehicles…has come down drastically over the years,” he said. With goods and services tax (GST) changes lowering the cost of BS-VI vehicles, he believes customers who earlier moved to the used market may now choose new vehicles again.

For the second half of the year, Selvan anticipates strong momentum in the vehicle finance business, targeting 18-20% assets under management (AUM) growth for 2025-26. Two-wheelers and passenger cars delivered a strong second quarter, supported by festival demand and GST cuts. A major driver in second half of the year will be the company’s gradual return to the heavy commercial vehicle segment. “Now the trend is cost of funds being low, we will now slowly move back into the heavy commercial vehicle segment also,” he said.

On financial performance, Selvan guided for an improvement in net interest margins, expecting an increase of 5-10 basis points in quarter three and quarter four, and a 20-25 basis-point improvement for the full year. Credit costs are expected to decline, closing the year around 1.5% to 1.6%, including the final impact from winding down the Fintech book by quarter four.

Also Read | Cholamandalam’s Arul Selvan sees slower AUM growth, higher credit costs in FY26

Other lending segments continue to perform steadily. The Loan Against Property (LAP) portfolio is growing at over 30%, while the home loan business is expected to achieve around 20% AUM growth after resolving temporary registration-related delays in some states. Selvan said competition in home loans comes mainly from other NBFCs and housing finance companies, as Chola focuses on self-employed non-professionals.

Selvan said he remains confident of delivering a full-year Return on Assets in the 2.2% to 2.4% range.

Cholamandalam Investment, with a market capitalisation of ₹1.40 lakh crore, has seen its shares rise more than 34% over the past year.

For the full interview, watch the accompanying video

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