Cholamandalam Investment & Finance Company Share price and Fundamental Analysis

Company History

Cholamandalam Investment and Finance Company (CIFCL) is comprehensive financial services provider offering vehicle finance, home loans, SME loans, consumer & small enterprise loan, loan against property, insurance agency, home equity loans, secured business & personal loan, wealth management, stock broking, mutual fund distribution and a variety of other financial services to customers. The company operates from 1,191 branches across India with Assets Under Management above Rs 1,12,782 Crore.

Promoted by M.A. M Arunachalam, M V Murugappa, and M V Subbiah on 17 August 1978 as a public limited company, Cholamandalam Investment and Finance Company (CIFCL), belonging to the Murugappa Group, commenced business on 22 Nov.'78. In 1986, Standard Chartered Bank (SCB) took up a 28% stake, which was later increased to 30%. SCB disinvested its holding in 1993 as a part of its strategic review of its business. Other group companies are EID Parry, Amphetronix, Parry Confectionery, Carborundum Universal, Tube Investment of India, etc.

In 1991-92, the company ventured into auto-finance for cars and commercial vehicles. In Jan.'95, CIFCL came out with a public issue of equity shares at a premium of Rs 90, aggregating Rs 42.5 cr, to part-finance its long-term fund requirements to expand its activities.

The company ventured into mutual funds, securities trading and risk management through separate subsidiaries/joint ventures. Cholamandalam Securities is its wholly owned subsidiary. The company made a Right Issue in the ratio of 1:2 to its existing shareholders in 2003.

On 27 August 2004, Cholamandalam Investment & Finance Company informed stock exchanges that Cholamandalam AXA Risk Services Ltd (CARSL) has become a subsidiary of the company with effect from 27 August 2004. This is consequent to the purchase of 5 lakh equity shares of CARSL after the termination of Joint Venture in CARSL with M/s. AXA, France.

On 5 November 2014, Cholamandalam Investment & Finance Company Ltd informed the stock exchanges that Cholamandalam Risk Services Ltd (CRSL), formerly known as Cholamandalam AXA Risk Services Ltd, ceases to be the subsidiary of the company with effect from 28 October 2004. This is consequent to the further issue of 5 lakh equity shares to M/s Mitsui Sumitomo Insurance Company Ltd (MS) on private placement basis by CRSL pursuant to a joint venture entered into with MS.

On 6 October 2005, Cholamandalam Investment & Finance Company announced that in order to avoid further delay in progressing the transaction with DBS Bank Ltd, Singapore (DBS), the parties would proceed with the transaction without the preferential issue. The existing promoters of the company (i.e., Tube Investments of India and its affiliates) and DBS will proceed with the amended transaction, which will now comprise an open offer by DBS of up to 20% of the existing paid-up share capital of the company and the purchase by DBS, following completion of the open offer, from the existing promoters of the company, of between 15.1% and 27.5% of the paid-up share capital of the company. As agreed before, DBS and the existing promoters of the company will hold an equal number of shares in Cholamandalam Investment & Finance Company following completion of the transaction. Earlier, the Board of Directors of Cholamandalam Investment & Finance Company at its meeting held on 16 June 2005 had approved an issue of up to 30 lakh equity shares to DBS Bank Ltd, Singapore (DBS) at a premium of Rs 140 per share on a preferential basis.

The Board of Directors of Cholamandalam Investment & Finance Company at its meeting held on 27 January 2006 approved changing the name of the company to Cholamandalam DBS Finance Ltd, subject to the approval of the shareholders and other regulatory approvals.

On 18 December 2006, Cholamandalam DBS Finance Ltd announced that the company has obtained a new Certificate of Registration from RBI as Non Deposit - Non Banking Financial Company (ND-NBFC). This was further to the approval from the Board of Directors to exit out of public deposits and apply for a new status as ND-NBFC. The company had stopped accepting fresh public deposits and renewing public deposits with effect from 1 November 2006.

The Board of Directors Cholamandalam DBS Finance Ltd at its meeting held on 30 January 2009 approved a capital restructuring proposal which involves utilisation of Rs 323.53 crore, being the balance standing to the credit of the Securities Premium Account as on 31 March 2008 for making certain provisions for standard assets, write off of bad debts, loan losses etc, to the extent required and diminution, other than temporary, in the value of investments, that may be required as on 31 March 2009.

On 25 September 2009, Cholamandalam DBS Finance Ltd (CDFL) and L&T Finance Ltd (LTF) signed a MOU for the sale of CDFL's 100% shareholding in DBS Cholamandalam Asset Management Limited (DCAM) for a consideration of Rs 45 crore. CDFL in the last one year has taken several strategic initiatives to strengthen its position to be a strong NBFC. Founded in 1996, DCAM has an AUM of about Rs 2900 crore across 24 schemes. Considering its own longer-term vision for its core businesses, CDFL has decided to exit the asset management business.

On 3 February 2010, Cholamandalam DBS Finance informed the stock exchanges that the company has acquired 3.47 lakh equity shares of Cholamandalam Factoring Ltd, (CFACT), a non banking finance company registered with RBI. With this acquisition, CFACT has become a subsidiary of the company with the aggregate holding of the company in CFACT constituting 95.55%. The acquisition is expected to support the company in its collection activities with more focused efforts and synergies.

Tube Investments of India Ltd., representing Murugappa Group, and DBS Bank Ltd. (DBS), Singapore in a joint press release issued on 30 March 2010 announced that they have entered into an agreement for the Murugappa Group to buy the DBS stake of 37.48% in Cholamandalam DBS Finance Ltd at Rs 91 per share. The partners announced that, in view of the change in the approach and business model for the company, they have after a detailed discussion decided to focus on their respective priorities and growth strategies. DBS and Murugappa Group remain open to future collaboration opportunities in areas such as wealth management, distribution of financial products etc.

On 11 May 2010, Cholamandalam DBS Finance signed a subscription agreement with International Finance Corporation (IFC), member of the World Bank, for the issue of 1.08 crore equity shares to IFC at issue price of Rs 92 per equity share aggregating to Rs 100.23 crore.

The name of Cholamandalam DBS Finance Ltd was changed to Cholamandalam Investment & Finance Company with effect from 2 June 2010.

On 28 August 2010, Cholamandalam Investment & Finance Company Ltd (CIFCL) announced that it has entered into an M.O.U. with VE Commercial Vehicles Ltd (VECV), a 50-50 joint venture between the Volvo Group and Eicher Motors Ltd, for financing of Eicher Heavy Duty Tucks and Buses across the country. On 11 October 2010, Cholamandalam Investment and Finance Company (CIFCL) announced that it has allotted 3000 Perpetual Debt Instruments (PDI) in the nature of unsecured non-convertible debentures of Rs 5 lacs each aggregating Rs 150 crore to M/s. Darashaw & Company Pvt. Ltd. CIFCL is already a leading financier for the Eicher range of Light & Medium Duty trucks. With this next level of relationship covering Eicher Heavy Duty Trucks, CIFCL aims to achieve a healthy Eicher retail credit portfolio by the end of current Financial Year 2010-11.

On 16 March 2012, Cholamandalam Investment and Finance Company (CIFCL) announced allotment of 1.32 crore equity shares at issue price of Rs 160 per share on preferential basis in favour of two investors. A total of 66.27 lakh shares were allotted to Creador 1 LLC, 48.13 lakh shares were allotted to Multiples Private Equity FII I and 18.14 lakh shares were allotted to Multiples Private Equity.

The Board of Directors of Cholamandalam Investment and Finance Company (CIFCL) at its meeting held on 30 October 2012 considered and approved a Scheme of Amalgamation of the company's wholly owned subsidiary viz. Cholamandalam Factoring Ltd. (CFACT) with the company, subject to the approval of shareholders, creditors, regulatory authorities, etc. and sanction of the Scheme by the Hon'ble High Court of Judicature at Madras. The proposed 'Appointed Date' for amalgamation is 1 April 2012.

On 13 February 2013, Cholamandalam Investment and Finance Company (CIFCL) announced that it has successfully completed qualified institutional placement of equity shares. The company approved allotment of 1.05 crore equity shares to qualified institutional buyers at issue price of Rs 285 per share aggregating Rs 300 crore.

The Board of Directors of Cholamandalam Investment and Finance Company (CIFCL) at its meeting held on 26 July 2014 considered and approved an issue of 5 crore Compulsorily Convertible Preference Shares (CCPS) of Rs 100 each aggregating to Rs 500 crore to investors on a preferential basis. The capital infusion will help the company to meet the business growth and augment the Tier 1 capital adequacy ratio (CAR). The CCPS shall be converted into equity shares at the expiry of 12 months from the date of allotment or earlier at the discretion of the Board at a conversion price of Rs 407 per share. The entire CCPS issue will be subscribed by funds advised by the global private equity firm Apax Partners.

On 10 March 2015, Cognizant, a leading provider of information technology, consulting, and business process outsourcing services, announced that it has engaged with Cholamandalam Investment and Finance Company (CIFCL) to digitally transform its vehicle finance business operations, from loan origination through recovery, in order to reduce costs, improve business agility, and deliver an integrated customer experience.

On 24 June 2015, Cholamandalam Investment and Finance Company (CIFCL) informed the stock exchanges that credit rating agency CRISIL has upgraded the rating for the long-term debt instruments of the company to CRISIL AA/Stable' from CRISIL AA-/Positive. The outlook on the above debt instruments denotes high degree of safety regarding timely servicing of financial obligations and such instruments carry very low credit risk.

On 30 June 2015, Cholamandalam Investment and Finance Company (CIFCL) announced its association with Ola, India's leading mobile app for personal transportation, to offer car loans to drivers on Ola's platform, with an option of daily repayment scheme as against the current practice of an EMI.

On 29 January 2016, Cholamandalam Investment and Finance Company (CIFCL) announced that the company has closed its negotiations with M/s. White Data Systems India Private Limited (White Data) and its promoters for investing Rs 8 crore in White Data. CIFCL will be investing Rs 8 crore in acquiring 63% equity stake in White Data at a price of Rs 62.70 per share. White Data is in the business of providing freight data solutions, which offers a holistic and integrated approach to freight data solutions, encompassing technology, certification and financial offerings. CIFCL's investment in White Data is expected to leverage synergies for Chola and its commercial vehicle customers by way of improved freight utilisation and income generation.

On 23 March 2016, Cholamandalam Investment and Finance Company (CIFCL) informed the stock exchanges that the Board of Directors of the company at its meeting held on 23 March 2016 decided that the company will not pursue the Payments bank opportunity and hence would surrender the in-principle approval accorded by the Reserve Bank of India (RBI) to its wholly owned subsidiary Cholamandalam Distribution Services Limited (CDSL) to establish a payments bank in the private sector. Consequently, CIFCL will not proceed with the investment/capital infusion of Rs 75 crore in CDSL approved for this purpose as intimated to the exchanges on 29 January 2016.

On 3 August 2016, Cholamandalam Investment and Finance Company (CIFCL) announced the inauguration of four new branches in the outskirts of Bengaluru. The opening of four new branches is a part of the larger branch expansion exercise for this year.

On 28 September 2017, Cholamandalam Investment and Finance Company (CIFCL) announced that India Ratings and Research and Care Ratings have announced an upgrade on the long term debt rating of CIFCL. The upward revision is assigned for the improved profitability and holding asset quality at the accepted levels in times of weak market operating cycles. CIFCL also demonstrated its ability to generate funds, maintain a strong capital structure and a well-matched asset liability maturity profile.

The Board of Directors of Cholamandalam Investment and Finance Company (CIFCL) at its meeting held on 20 December 2017 approved issuance of 3500 Masala bonds in the nature of Secured Redeemable, Non-Convertible Debentures of a face value of Rs 1 crore each at par aggregating to USD 500 million (Rs 3500 crore) in one more tranches on private placement basis. The Board also approved the setting up of a housing finance company as a subsidiary and approved necessary authorizations to make an application to National Housing Board and do the needful in this connection.

Cholamandalam Investment and Finance Company (CIFCL) have developed new technologies in FY2018, to adopt and stimulate mutual fund, stock, commodities and FCCBs through BSE and NSE Limited. The Company's total revenue has crossed Rs 42.5 billion in FY 2018.

The Company in FY 2019 entered into a MoU with Cholamandalam AXA Risk Services Ltd (CARSL), the subsidiary of the company for purchase of assets and bonds worth Rs 5 lacs from FIIs. These assets were in line with the subsidiary, to purchase further Rs 5 lacs for reissuance of bonds and debentures of the company within a stipulated period of time.

On 11 May 2019, Cholamandalam DBS Finance signed a subscription agreement with International Finance Corporation (IFC), member of the World Bank, for the issue of 3.08 crore equity shares to IFC at issue price of Rs 112 per equity share aggregating to Rs 100.23 crore.

Pursuant to approval of shareholders on 13 January, 2020 and 24 February, 2020, the Company had allotted 2,81,25,000 equity shares to 36 Qualified Institutions Buyers at Rs. 320 per equity share on 31 January, 2020 and 93,45,794 equity shares to Cholamandalam Financial Holdings Limited, a promoter entity by way of a preferential allotment at Rs. 321 per equity share on 7 March, 2020.

In FY 2021, Home Loans were offered across 9 states including Tamil Nadu, Andhra Pradesh, Karnataka, Madhya Pradesh, Kerala, Gujarat, Maharashtra, Rajasthan and Chhattisgarh.

During the year 2022, the Company invested Rs. 450 crores and acquired 73.8% stake in equity share capital of Payswiff Tehcnologies Private Limited (PTPL). Consequently, PTPL become a subsidiary of the company. It acquired 16.29% stake in equity share capital of Paytail Commerce Private Limited to participate in the fintech space. It launched Consumer & Small Enterprise Loan (CSEL), Secured Business & Personal Loan (SBPL) and SME Loans. Through the CSEL division, it has entered in strategic partnership with 3 leading Fintech companies - BankBazaar, Kreditbee and Paytail.

The Company sold 12,75,917 equity shares constituting 30.87% held by the Company in White Data Systems India Private Limited (WDSI) to TVS Supply Chain Solutions Limited (TVSSCSL) and consequent to sale, WDSI ceased to be an associate of the Company on 20 April, 2023.