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• This is the 4th debt offer from CIFCL since April 2023.
• The previous debt offer was in the month of November 2023.
• The company has a shelf limit of Rs. 5000 cr. for the debt offers.
• This issue is rated IND AA+ / Stable by India Rating and ICRA AA+ by ICRA Ltd.
• Investors looking for steady returns may consider parking funds for medium to long term.
ABOUT COMPANY:
Cholamandalam Investment and Finance Co. Ltd. (CIFCL) is a non-banking finance company, incorporated in 1978 as the financial services arm of the Murugappa group, which has more than 122 years of existence. The Company is categorized as a NBFC-ICC. It commenced business as an equipment financing company and have since expanded operations to offer vehicle finance, loan against property, home loans, loans to small and medium-sized enterprises ("SMEs"), consumer and small enterprise loans and secured business and personal loans.
The company also offers stock broking and a variety of other financial services to customers through its Subsidiaries. As of September 30, 2023, it had 30.94 lakhs active customers across India. It is diversified in terms of the products it offers, the geographies within India where the company operate and cater to all customers. As of September 30, 2023, it had 1267 branches and 571 resident locations across 29 States and Union Territories in India. It had 50980 employees on its payroll as of the said date.
It has been able to leverage knowledge and experience in the vehicle finance industry coupled with its relationships with OEMs and dealers to grow operations and expand operating network. In addition, being a part of the Murugappa group it has been able to derive significant synergies by leveraging their brand and existing customer base.
ISSUE DETAILS:
The company is coming out with its 4th debt issue under Tranche-IV to mobilize Rs. 1163 cr. as an aggregate amount. The base size of the issue is Rs. 500 cr. and it has green show option to retain oversubscription to the tune of Rs. 1163 cr. The company has a shelf limit of Rs. 5000 cr. The company is issuing secured, redeemable non-convertible-debentures having a face value of Rs. 1000 each. A minimum application is to be made of 10 NCDs (i.e. Rs. 10000) and in multiple of 1 NCD (i.e. Rs. 1000) thereon, thereafter. The issue opens for subscription on January 19, 2024, and will close on or before February 02, 2024. Post allotment, NCDs will be listed on BSE and NSE. CIFCL is spending Rs. 13.76 cr. for this Rs. 1000 cr. NCD issue and from the net proceeds, it will utilize at least 75% for the purpose of onward lending, financing, repayment of existing borrowings, and maximum up to 25% for general corporate purposes.
The company has allocated 30% for Institutional, 25% for Non-Institutional, 25% for HNIs and 20% for Retail investors. The issue is solely lead managed by A K Capital Services Ltd. and KFin Technologies Ltd. is the registrar of the issue. IDBI Trusteeship Services Ltd is the debenture trustee.
This NCD issue has tenors of 24 months, 36 months and 60 months. It offers a coupon rate ranging from 8.45% to 8.60% with interest payment options of Annual or Cumulative, as per the series opted by the investors. The allotment will be in demat mode only and will be done on "First come - First Served" basis. Put and Call option is not applicable for this issue.
ISSUE RATINGS:
This debt offer is rated IND AA+ / Stable by India Ratings and Research Pvt. Ltd. and ICRA AA+ by ICRA Ltd. Instruments with this rating are considered to have adequate degree of safety regarding timely servicing of financial obligations. Such instruments carry low credit risk.
The rating provided by the Credit Rating Agencies may be suspended, withdrawn or revised at any time by the assigning rating agency and should be evaluated independently of any other rating. These ratings are not a recommendation to buy, sell or hold securities and investors should take their own decisions.
FINANCIAL PERFORMANCE:
On the financial performance front, for the last four fiscals, CIFCL has (on a consolidated basis) posted a total income of Rs.8774 cr. / Rs. 1054 cr. (FY20), Rs. 9639 cr. / Rs. 1521 cr. (FY21), and Rs. 10232 cr. / Rs. 2159 cr. (FY22), and Rs. 13106 cr. / Rs.2677 cr. For H1 of FY24 it earned a net profit of Rs. 1482.81 cr. on a total income of Rs. 8865.95 cr.
CIFCL's net NPA for FY23 stood at 3.11% against 4.85% for FY22. Its debt-equity ratio as of September 30, 2023, at 7.56 will stand at 6.94 post this issue. Its paid-up equity capital of Rs. 164.57 cr. is supported by free reserves of Rs. 15642.68 cr. as of September 30, 2023.
Review By Dilip Davda on January 18, 2024
DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor before making any actual investment decisions, based on the information published here. My reviews do not cover GMP market and operators game plans. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in stock markets is subject to unpredictable market-related risks. The above information is based on RHP and other documents available as of date coupled with market perception. The author has no plans to invest in this offer.
About Dilip Davda
Dilip Davda is veteran journalist associated with stock market since 1978. He is contributing to print and electronic media on stock markets/insurance/finance since 1985.
Dilip Davda is a leading reviewer of public issues and NCDs in the primary stock market in India. The knowledge he gained over 3 decades while working in the stock market and a strong relationship with popular lead managers makes his reviews unique. His detail fundamental and financial analysis of companies coming up with IPO helps investors in the primary stock market. Dilip Davda has a special interest in analyzing the SME companies and writing reviews about their public issues. His reviews are regularly published online and in news papers.
(Dilip Davda -SEBI registered Research Analyst-Mumbai,
Registration no. INH000003127 (Perpetual)
Email id: dilip_davda@rediffmail.com ).
The Cholamandalam Investment NCD Tranche IV Jan. 2024 Analysis helps you to understand about the company, offer detail, valuation, capital structure and financial performance. Our SEBI registered NCD Analysts tells you if Cholamandalam Investment NCD Tranche IV Jan. 2024 worth investing. The Cholamandalam Investment NCD Tranche IV Jan. 2024 Note sets the NCD expectations in systematic way which tells you if Cholamandalam Investment NCD Tranche IV Jan. 2024 good to buy (good or bad / yes or no). The NCD Forecast tells you weather to invest in Cholamandalam Investment NCD Tranche IV Jan. 2024 by providing NCD recommendations i.e. subscribe, avoid and neutral.
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