Cholamandalam Financial Holdings (CHOLAHLDNG) Q4 15/16 earnings summary

Executive summary

• FY16 net turnover rose 4% to ₹3,790 Cr; profit before exceptional items and tax increased 15% to ₹139 Cr, while reported PAT reached ₹730 Cr, boosted by a one-off investment-sale gain.

• Bicycles delivered record sales of over 45 lakh units, up 13% in volume; operating performance improved despite weak trade demand and costs from ramping the large-diameter tube facility.

• Consolidated net profit rose to ₹1,039 Cr from ₹424 Cr, including a ₹762 Cr gain on the insurance stake sale; results are not directly comparable after the finance associate ceased to be consolidated from September 2015.

Financial highlights

• Standalone net sales were ₹3,790 Cr versus ₹3,646 Cr; PBDIT increased 8% to ₹385 Cr and profit before exceptional items and tax rose 15% to ₹139 Cr.

• Standalone PAT was ₹730 Cr versus ₹121 Cr; exceptional items included ₹821 Cr profit on sale of investments, ₹37 Cr impairment and ₹27 Cr VRS compensation.

• Consolidated revenue from operations was ₹7,991 Cr versus ₹9,722 Cr; consolidated PBT reached ₹1,374 Cr and net profit ₹1,039 Cr, including the ₹762 Cr insurance divestment gain.

• Operating cash flow was ₹135 Cr standalone; cash and cash equivalents at year-end were ₹735 Cr, including proceeds from the ₹883 Cr insurance share sale.

Outlook and guidance

• Rajpura bicycle plant, with capacity of 2.5 lakh units monthly, was expected to begin commercial production in Q2 FY17; plans targeted capacity ramp-up and northern and eastern market growth.

• Large-diameter tube production was stabilizing, with significant ramp-up planned for FY17 to improve utilization and market share in non-automotive markets.

• Ambattur high-end bicycle export capacity was being expanded by 30,000 units monthly, with rated capacity expected during FY17; e-commerce, new products and cost initiatives were also planned.

• Fine-blanked products were receiving global customer accreditation, with capacity expansion and capability upgrades planned; TI Tsubamex expected commercial production after trial operations and order wins.