Chola's Q4 profit rose 30.62% as tax relief offset margin pressure
Revenue grew 19.46% YoY, but expenses grew 29.20%; operating margin recovered 1.49 percentage points sequentially.
Filed 30 Apr 2026, 13:20 IST · Cholamandalam Investment & Finance Company Ltd (CHOLAFIN)
Key takeaways
- Consolidated net profit rose 30.62% YoY, helped by a 2.62-percentage-point lower tax rate even as operating margin fell 2.32 percentage points.
- Operating margin recovered 1.49 percentage points sequentially because revenue grew 6.56% while expenses rose only 1.68%.
- The 69.15% operating margin was 9.74 percentage points above the 59.41% median for 52 reporting Financial Services peers.
Price around the results
Lower tax rate lifted Q4 profit growth
These consolidated results show profit before tax rising 26.17% YoY, while net profit grew faster at 30.62% as the tax rate fell 2.62 percentage points to 23.23%. Other income contributed 6.90% of pre-tax profit, so it was a supporting factor but not the main earnings driver. Operating profit grew 15.57%, slower than revenue growth of 19.46%.
Sequential margin recovery after a three-quarter decline
Operating margin improved 1.49 percentage points QoQ because revenue grew 6.56% while expenses increased only 1.68%; interest expense still rose 2.94%. The margin had declined from 71.47% in Q4FY25 to 67.16% in Q2FY26, before recovering to 69.15% in Q4FY26. It remains below last year's Q4 level, but is above the 59.41% median reported by 52 Financial Services peers.
Management sees mixed vehicle-sector momentum
The presentation said HCV sales grew 20% in Q4FY26 to a record level, supported by freight activity, infrastructure momentum and replacement demand; it also said the two-wheeler industry grew 26% in the quarter. Management said HCV growth should remain stable in FY27, while LCV and passenger-vehicle growth should be moderate, with passenger vehicles expected to grow in single digits. It also said construction equipment could see a gradual recovery aided by infrastructure and mining activity, and that smaller-town expansion, digitisation and AI-led efficiencies are intended to support market-share gains and operating leverage.
The initial stock reaction was within its usual range
The stock opened with a 2.03% gap down but ended the results day 0.62% higher, against a historical median absolute post-results move of 1.59%. The three-day move reached 5.55% and the five-day move 7.78%, which was materially larger than its typical initial reaction. Across the last eight results, the stock rose after three and fell after five.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹8,417 cr | ₹7,898 cr | +6.56% | +19.46% |
| Other income | ₹148 cr | ₹111 cr | +33.22% | +61.24% |
| Expenses | ₹2,597 cr | ₹2,554 cr | +1.68% | +29.20% |
| Operating profit | ₹5,820 cr | ₹5,344 cr | +8.90% | +15.57% |
| Operating margin (%) | 69.15% | 67.66% | — | — |
| Interest | ₹3,753 cr | ₹3,646 cr | +2.94% | +11.54% |
| Depreciation | ₹72 cr | ₹74 cr | -2.90% | +11.78% |
| Profit before tax | ₹2,143 cr | ₹1,736 cr | +23.47% | +26.17% |
| Tax | ₹498 cr | ₹446 cr | +11.70% | +13.42% |
| Net profit | ₹1,645 cr | ₹1,290 cr | +27.54% | +30.62% |
| EPS (₹) | ₹19.33 | ₹15.29 | +26.42% | +29.04% |
Operating margin of 69.15% compares with a Financial Services sector median of 59.41% across 52 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.62% | +1.36% |
| Next session | +5.55% | — |
| 5 sessions | +7.78% | +7.78% |
| 15 sessions | -0.87% | — |
| 30 sessions | +6.46% | — |
Volume on the results session was 3.47× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- HCV sales reached a record high in Q4 FY26, supported by freight activity, infrastructure momentum and replacement demand.
- The two-wheeler industry grew 26% in Q4 FY26, with the quarter marking a record quarter.
Guidance & outlook
- HCV segment growth is expected to remain stable in FY27.
- LCV segment growth is expected to remain moderate in FY27 because of a high base effect.
- Passenger vehicle growth is expected to moderate to single digit in FY27.
- The two-wheeler segment is expected to see moderate growth driven by sustained demand momentum.
- Gradual recovery in construction equipment is expected in FY27, aided by infrastructure and mining activity.
Expansion
- Chola is pursuing targeted retail expansion in smaller towns and rural markets to gain market share.
New products
- Passenger vehicle demand was supported by new model launches.
New initiatives
- Chola is improving operating leverage through a low-cost distribution model, digitization and AI-led efficiencies.
- More than 50 initiatives are planned for FY26 to strengthen cyber risk mitigation.
- Chola has deployed Brand Monitoring to detect and protect against misuse of its brand across digital platforms.
- Chola has deployed CERTIN and Chola Honey pot as part of its threat intelligence capabilities.
Competition
- Chola is targeting market-share gains through expansion in smaller towns and rural markets.
Problems & risks
- Construction equipment declined because of monsoon-led execution delays and higher acquisition costs from emission norms.
- NBFC retail credit costs are expected to rise by 10 to 30 basis points during FY2026 before stabilizing in FY2027.
- Home-loan funding costs could be affected by external factors such as inflationary pressures.
- External disruptions affecting borrower income and credit quality pose downside risk to asset quality.
What to watch
- Whether operating margin holds above the 69.15% reached after its 1.49-percentage-point QoQ recovery.
- Whether the tax rate remains near 23.23% rather than reverting to the 25.85% reported in Q4FY25.
- Whether credit costs track management's stated 10-30 basis-point increase during FY2026 before stabilising in FY2027.