Profit grew 19.33% YoY, but operating margin stayed below last year's level
Consolidated margin improved sequentially as expenses grew slower than revenue, while lower tax and other income supported reported profit.
Filed 08 May 2026, 14:27 IST · Cholamandalam Financial Holdings Ltd (CHOLAHLDNG)
Key takeaways
- Consolidated net profit rose 19.33% YoY to Rs 1,625.55 cr, helped by a 2.75 percentage-point fall in the tax rate.
- Operating margin recovered 0.88 percentage points QoQ as revenue grew faster than expenses, but remained 2.60 percentage points below Q4FY25.
- The stock gained 1.46% on results day, a smaller move than its 3.2% median absolute reaction after the past eight results.
Price around the results
Revenue growth lifted profit, but funding costs rose
Cholamandalam Financial Holdings' consolidated revenue grew 17.17% YoY and 4.97% QoQ to Rs 10,443.66 cr. Profit before tax increased 15.02% YoY and 14.97% QoQ, while interest costs rose 11.73% YoY and 2.92% QoQ. Other income contributed 7.28% of pre-tax profit, so it was a meaningful but not dominant part of earnings.
Margin recovered sequentially after a year-on-year squeeze
Operating margin expanded 0.88 percentage points QoQ because revenue grew 4.97% while expenses grew 2.93%. The YoY comparison was less favourable: expenses rose 24.51%, faster than revenue growth of 17.17%, narrowing margin by 2.60 percentage points. Margin has recovered from 53.78% in Q2FY26 to 55.78% in Q4FY26, but remains below 58.38% in Q4FY25.
Profit quality got a lift from the tax rate
Net profit grew faster than pre-tax profit YoY, at 19.33% versus 15.02%, as the tax rate fell 2.75 percentage points to 24.11%. The sequential tax-rate decline was also 1.51 percentage points, which helped the 17.30% QoQ increase in net profit. The quarter therefore included a tax benefit relative to both comparison periods, alongside the 7.28% contribution of other income to pre-tax profit.
HCV growth offset construction-equipment weakness
Management said the HCV segment grew 20% in Q4FY26 and reached record-high sales, supported by freight and infrastructure activity. The company said Construction Equipment declined 5% in the quarter because of monsoon-led execution delays and higher acquisition costs linked to emission norms. Management also said it is pursuing retail expansion in smaller towns and rural markets, while using low-cost distribution, digitisation and AI-led efficiencies to improve operating leverage.
The market reaction was mild at first, then weakened
The stock gained 1.46% on the result date and 0.52% by the next session, but was down 5.53% after five sessions and 13.31% after 15 sessions. The initial move was below the 3.2% median absolute reaction across the past eight results, when the stock rose four times and fell four times. Relative performance was positive by 2.08% on day zero but negative by 2.72% after five sessions.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹10,444 cr | ₹9,949 cr | +4.97% | +17.17% |
| Other income | ₹156 cr | ₹137 cr | +14.09% | +58.74% |
| Expenses | ₹4,619 cr | ₹4,487 cr | +2.93% | +24.51% |
| Operating profit | ₹5,825 cr | ₹5,462 cr | +6.65% | +11.94% |
| Operating margin (%) | 55.78% | 54.90% | — | — |
| Interest | ₹3,755 cr | ₹3,648 cr | +2.92% | +11.73% |
| Depreciation | ₹84 cr | ₹87 cr | -3.37% | +6.27% |
| Profit before tax | ₹2,142 cr | ₹1,863 cr | +14.97% | +15.02% |
| Tax | ₹517 cr | ₹477 cr | +8.21% | +3.27% |
| Net profit | ₹1,626 cr | ₹1,386 cr | +17.30% | +19.33% |
| EPS (₹) | ₹36.59 | ₹33.32 | +9.81% | +11.96% |
Operating margin of 55.78% 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 | +1.46% | +2.08% |
| Next session | +0.52% | — |
| 5 sessions | -5.53% | -2.72% |
| 15 sessions | -13.31% | — |
| 30 sessions | -9.45% | — |
Volume on the results session was 0.60× 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
- The HCV segment grew 20% in Q4 FY26, reaching record-high sales supported by freight and infrastructure activity.
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.
- Two-wheeler growth is expected to be moderate, driven by sustained demand momentum.
- Construction Equipment is expected to recover gradually in FY27.
Expansion
- The company is pursuing targeted retail expansion in smaller towns and rural markets.
New initiatives
- The company is improving operating leverage through low-cost distribution, digitization and AI-led efficiencies.
Competition
- The company is pursuing market-share gains through targeted retail expansion and a presence across Tier 1 and Tier 2 locations.
Problems & risks
- Construction Equipment declined due to monsoon-led execution delays and higher acquisition costs from emission norms.
- LCV growth in FY27 may be constrained by a high base effect.
- NBFC retail credit costs are expected to remain elevated, rising by 10 to 30 basis points during FY2026.
- External factors such as inflationary pressures could affect the overall cost of funds.
- External disruptions affecting borrower income and credit quality pose downside risk to asset quality.
What to watch
- Whether operating margin holds above 55.78% after its 0.88 percentage-point QoQ recovery.
- Whether interest-cost growth stays below the 11.73% YoY increase reported in Q4FY26.
- Whether the HCV segment sustains the 20% Q4FY26 growth while Construction Equipment recovers from its 5% decline.