Cholamandalam Financial Holdings (CHOLAHLDNG) Q4 09/10 earnings summary

Executive summary

• FY09-10 net sales and processing charges rose to Rs.2,345.64 crore from Rs.2,059.24 crore; operating profit before tax reached Rs.169.45 crore, up 366% YoY.

• All three core segments improved; reported PAT was Rs.81.21 crore standalone and Rs.112.26 crore consolidated, with results affected by exceptional items.

Financial highlights

• Gross sales including excise duty were Rs.2,453.65 crore vs Rs.2,212.22 crore; net sales were Rs.2,345.64 crore vs Rs.2,059.24 crore.

• EBITDA before exceptional items rose 114% to Rs.265 crore from Rs.124 crore; operating EBITDA margin increased to 11.3% from 5.7%.

• Standalone PBT was Rs.129.50 crore vs Rs.83.02 crore, up 56%; PAT was Rs.81.21 crore vs Rs.72.18 crore.

• Exceptional items included a Rs.46.66 crore gain on sale of long-term investments and a Rs.39.95 crore provision for liquidation-related losses.

• Consolidated net profit after tax rose to Rs.112.26 crore from Rs.52.61 crore; consolidated EPS was Rs.6.08 vs Rs.2.85.

Outlook and guidance

• India GDP growth was forecast at ~8.5% for FY10-11, supported by investment- and consumption-led demand.

• Priorities included continued investment in capabilities, skills, R&D and training, alongside quality, customer service and timely delivery.

• Capacity expansion was planned to support demand in chains and railway products; the Sanand doorframe facility was expected to commission in Q1 FY10-11.

• Engineering plans emphasized new products, higher market share, quality and service; bicycle plans focused on product upgrades and contemporary technology.