Cholamandalam Investment and Finance Company Ltd (CIFCL), a flagship NBFC under the Murugappa Group, has announced a substantial fundraise of ₹550 billion through the issuance of Non-Convertible Debentures (NCDs). This move marks one of the largest debt issuances in the Indian financial services sector this year, aimed at fortifying the company’s lending capacity across its diversified portfolio.
Key takeaways from the announcement
- The ₹550 billion issuance is part of a broader shelf limit of ₹5,000 billion approved for long-term capital planning
- The NCDs are structured as secured, redeemable instruments with tenures ranging from 24 to 84 months
- Coupon rates vary between 8.39 percent and 8.60 percent depending on tenure and payment frequency
- The issue includes a green shoe option of ₹500 billion, allowing oversubscription retention
- Instruments are rated AA+ (Stable) by ICRA and India Ratings, reflecting strong creditworthiness
Purpose and deployment of funds
- At least 75 percent of the proceeds will be directed toward onward lending, refinancing existing borrowings, and expanding secured loan portfolios
- Up to 25 percent will be allocated for general corporate purposes, including digital infrastructure and branch network expansion
- CIFCL aims to deepen its footprint in vehicle finance, SME lending, and home loans, with a focus on Tier 2 and Tier 3 cities
Investor segmentation and market response
- Allocation breakdown includes 20 percent for institutional investors, 35 percent for non-institutional, 25 percent for HNIs, and 20 percent for retail participants
- The NCDs are listed on both BSE and NSE, enhancing liquidity and investor access
- Despite the strategic nature of the raise, CIFCL’s stock saw a marginal dip of 3.22 percent post-announcement, attributed to profit-booking and broader market volatility
Governance and compliance
- The company has affirmed full compliance with SEBI’s Listing Obligations and Disclosure Requirements
- No defaults or delays have been reported in interest or principal payments
- CIFCL continues to maintain a clean track record with no adverse regulatory remarks
Strategic implications
- The capital infusion positions Cholamandalam to capitalize on rising credit demand in India’s NBFC sector
- With over 30.94 lakh active customers and 1,267 branches across 29 states and union territories, the company is well-placed to scale operations
- The issuance reflects investor confidence in CIFCL’s disciplined credit practices and long-term growth strategy
Conclusion
Cholamandalam’s ₹550 billion NCD issuance is a bold step toward reinforcing its financial muscle and expanding its reach in underserved markets. As credit appetite grows and NBFCs regain momentum, this move could serve as a blueprint for strategic capital deployment in the sector.
Sources: HDFC Sky, Chittorgarh, HDFC Securities, Cholamandalam Investment and Finance Company Ltd corporate disclosures
