MUMBAI: Shares of Cholamandalam Investment and Finance Company Ltd on Thursday declined more than 9% as the firm’s net profit slumped 85.4% year-on-year (YoY) to 42.7 crore in the March quarter from 291.9 crore in the year-ago period.

At 01:30 pm, the stock traded at 142.70, down 8.38%, from the previous close, while the Sensex fell 0.74% to 33857.63.

The non-banking financial company’s (NBFC) total income rose 14.11% YoY to 2,151.5 crore in Q4FY20 from 1,885.3 in the same period last year. One-time provision of 504 crore towards coronavirus-related losses and macro provisions majorly impacted net profit during the reporting quarter.

The company said covid-19 lockdown hit March-quarter disbursements, which dropped 36% YoY to 5,663 crore.

“The company has set aside an additional provision of 530 crore to meet any contingencies that may arise in future due to the covid-19 shutdown. It has not availed the moratorium so far on its borrowings and does not intend to do so,” analysts at Emkay Global Financial said in a note to clients.

“The company has cash in hand and sanctioned lines of around 10,000 crore as of May 31 as this adequately covers the needs of the asset-liability management process even after extending the moratorium to its customers for the second phase till September,” they added. Emkay Global has a buy rating on the stock.

Given the uncertainties in the market, the company was conservative with respect to creating contingency provisions towards covid-19 and maintaining more than adequate cash reserves, said Arun Alagappan, managing director, Cholamandalam Investment.

The company’s vehicle finance (VF) business clocked a volume of 4,703 crore for in quarter ended March, as against 7,383 crore a year ago, reporting a decline of 36% YoY.

Total assets under management (AUM) grew by 16% at 66,943 crore, compared to 57,560 crore in Q4FY19. As on 31 March, the capital adequacy ratio (CAR) of the company was at 20.7% (as per Ind AS), above the regulatory requirement of 15%.

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