Cholamandalam Finance Raises ₹831 Cr via Secured NCDs at 8.6% Coupon

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AuthorAbhay Singh|Published at:
Cholamandalam Finance Raises ₹831 Cr via Secured NCDs at 8.6% Coupon
Overview

Cholamandalam Investment and Finance Company Limited (CIFL) has successfully allotted ₹831 crore of Secured Non-Convertible Securities through private placement on the NSE's WDM segment. This capital infusion, part of a larger ₹1500 crore issue, carries an 8.60% coupon rate and matures in March 2029. The fundraising bolsters the NBFC's capital base for its expanding loan book.

Cholamandalam Finance Secures ₹831 Cr via Secured Debt Issuance

Cholamandalam Investment and Finance Company Limited has successfully allotted ₹831 crore of Secured Non-Convertible Securities, part of a larger ₹1500 crore issuance.
The bonds carry a coupon rate of 8.60% and a tenure of approximately three years, maturing in March 2029.

Reader Takeaway: Capital raised via secured debt; strong financials buffer past governance concerns.

What just happened (today’s filing)

Cholamandalam Investment and Finance Company Limited (CIFL) announced the completion of its private placement for Secured Non-Convertible Securities. The allotment saw ₹831 crore being successfully raised.

These securities were issued on the NSE's WDM (Wholesale Debt Market) segment. The total size of the issue is capped at ₹1500 crore, which includes a substantial ₹1000 crore green shoe option.

The issued securities carry a fixed coupon rate of 8.60% and offer a yield of 7.79%. They have a tenure of 3 years and 6 days, with the maturity date set for March 5, 2029.

Why this matters

For a leading Non-Banking Financial Company (NBFC) like CIFL, consistent access to diverse and cost-effective funding is crucial for maintaining growth momentum. This debt issuance allows the company to strengthen its capital base and support its expanding loan book.

It demonstrates market confidence in CIFL's financial health and its ability to meet its financial obligations, especially important given the competitive landscape for NBFCs and evolving interest rate environments.

The backstory (grounded)

Cholamandalam Investment and Finance Company Limited, part of the established Murugappa Group, has a long history in the financial services sector, dating back to 1978. The company has grown into a significant player with a vast network of over 1,700 branches and an Assets Under Management (AUM) exceeding ₹1.92 lakh crore as of mid-2025.

CIFL has a track record of raising capital through various instruments, including NCDs. In April 2023, for instance, it launched a public NCD issue aiming to raise up to ₹5,000 crore, offering attractive yields for investors. The company has shown robust financial performance, with its AUM growing by 27% and PAT increasing by 24% in FY25.

However, the company faced significant allegations in December 2025 from Cobrapost regarding corporate governance lapses, including related-party transactions and cash deposits. CIFL has strongly denied these claims, terming them baseless, and has reaffirmed its commitment to transparency and compliance. Analysts largely dismissed the concerns, citing industry practices and the company's solid financial footing.

What changes now

  • Strengthened Capital Base: The ₹831 crore raised will enhance CIFL's liquidity and capital adequacy ratios, providing a cushion for future lending operations.
  • Funding for Growth: The funds will support CIFL's ongoing business expansion, particularly in its core segments like vehicle finance and home equity.
  • Diversified Funding: This issuance diversifies CIFL's debt profile, reducing reliance on single sources of funding.
  • Market Access: Successful placement on the NSE's WDM segment reinforces CIFL's access to institutional debt markets.

Risks to watch

  • Interest Rate Sensitivity: As an NBFC heavily reliant on debt, CIFL's profitability can be impacted by fluctuations in borrowing costs.
  • Reputational Risk: While denied, the past allegations of governance lapses, even if unsubstantiated, can pose a reputational risk and require ongoing vigilance.
  • Asset Quality: Like all lenders, CIFL faces the inherent risk of asset quality deterioration, especially in economic downturns or specific loan segments.

Peer comparison

CIFL operates in a competitive NBFC landscape alongside giants like Bajaj Finance, Shriram Finance, and Aditya Birla Capital. These peers also frequently tap debt markets to fund their extensive operations in vehicle finance, housing, and retail lending.

While CIFL's focus remains on vehicle finance and home equity, its capital raising methods, including NCDs, are standard for the sector. The 8.60% coupon rate is competitive, aligning with current market offerings for similar rated NBFCs.

Context metrics (time-bound)

  • Cholamandalam Investment and Finance Company's Assets Under Management (AUM) grew by 27% from ₹148,167 crore in FY24 to ₹188,157 crore in FY25.
  • The company's Profit After Tax (PAT) saw a 24% year-on-year increase, from ₹3,423 crore in FY24 to ₹4,259 crore in FY25.

What to track next

  • Deployment of Funds: Monitor how effectively CIFL deploys the newly raised capital to drive loan growth and profitability.
  • Interest Rate Trends: Keep an eye on the broader interest rate environment, which will influence CIFL's future borrowing costs and net interest margins.
  • Asset Quality Performance: Track key asset quality metrics such as NPAs and collections to gauge the health of the loan portfolio.
  • Regulatory Landscape: Stay updated on any regulatory changes impacting NBFCs, including those related to capital requirements and funding.
  • Governance Vigilance: Continue to monitor any developments or clarifications regarding past governance allegations and the company's ongoing commitment to best practices.
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