Cholamandalam Investment and Finance Company, a prominent non-banking financial corporation (NBFC) backed by the Murugappa Group, is gearing up to raise up to Rs 4,000 crore through a Qualified Institutional Placement (QIP). The move comes on the heels of the firm’s Q1 earnings report, which showcased an impressive 28 percent year-on-year rise in net profit, amounting to Rs 726 crore. As part of its growth strategy, the company has shortlisted three investment banks, namely Kotak Mahindra Capital, IIFL Capital, and HSBC Securities, to advise on the QIP process.
The QIP is slated for launch in September, pending favorable market conditions, according to sources familiar with the matter. Cholamandalam Investment and Finance Company is poised to leverage the buoyant optimism in the NBFC sector, as evidenced by the significant surge in its share price, which has soared by nearly 39 percent in the last six months.
The envisioned QIP will enable the company to bolster its capital adequacy ratio (CAR) and seize new growth opportunities, especially in the vehicle finance vertical, where it plans to cross-sell other types of loans. The fund-raising exercise will involve a combination of equity issuance and convertible instruments, as confirmed by Arul Selvan, President, and CFO of Cholamandalam Investment and Finance Company.
With an asset under management (AUM) of Rs 1.15 lakh crore, the company has demonstrated robust growth across segments. Vehicle finance holds a significant share of the AUM at Rs 71,065 crore, accounting for 62 percent of the total, followed by loans against property and home loans. The successful completion of the QIP is expected to fortify Cholamandalam Investment and Finance’s position in the market and support its continued expansion into new verticals.
The overall NBFC sector has been witnessing a rally, with major peers of Cholamandalam Investment and Finance, such as Bajaj Finance, Shriram Finance, Muthoot Finance, and others, also experiencing notable share price surges.
As the company progresses with its QIP plans and awaits the necessary approvals, it remains committed to capitalizing on the promising market conditions to further strengthen its financial position and enhance its ability to serve customers efficiently.
