Cholamandalam NCD issue opened for subscription now and closes on August 10, 2023. Cholamandalam Finance provides vehicle loans, home loans, SME loans etc., It offers 22, 37 and 60 months tenure NCDs. Should you invest in Cholamandalam Investment NCD issue of July, 2023? What are the risk factors one should consider before investing in Cholamandalam NCD 2023?
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About Cholamandalam Investment and Finance Limited
Cholamandalam Investment and Finance Company Limited is part of Murugappa Group that provides vehicle finance, home-loans, home equity loans, SME loans, investment advisory services, stock broking, and other financial services.
Cholamandalam Finance has 1166+ branches across India with AUM above Rs 1,03,789 Crores. It has over 21 lakhs customers spanning across India.
Cholamandalam NCD – July-23 / August 2023 issue details
| Subscription opening Date | 28-Jul-23 |
| Subscription closure Date | 10-Aug-23 |
| Issuing Security Name | Cholamandalam Investment and Finance Company Limited |
| Security Type | Secured, Redeemable and Non-Convertible NCDs |
| Issue Size (Base) | Rs 500 Crores |
| Issue Size (Option to retain over subscription) | Rs 1,000 Crores |
| Total Issue Size | Rs 1,500 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 22, 37 and 60 months tenure |
| Interest Payment frequency | Yearly and on maturity |
| Listing on | Within 6 working days on BSE |
Cholamandalam NCD – Interest Rates – July-23 Issue
| Series | I | II | III | IV | V | VI |
|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Annual | Cumulative | Annual | Cumulative | Annual | Cumulative |
| Tenure (in months) | 22 | 22 | 37 | 37 | 60 | 60 |
| Coupon (% per Annum) | 8.25% | NA | 8.30% | NA | 8.40% | NA |
| Effective Yield (% per Annum) | 8.26% | 8.25% | 8.30% | 8.30% | 8.39% | 8.40% |
| Amount on Maturity (In Rs.) | 1,000 | 1,156.64 | 1,000 | 1,279.15 | 1,000 | 1,497.41 |
What are the credit ratings for these NCDs?
Cholamandalam Investment NCD’s are rated as ICRA AA+ (Stable) by ICRA Limited and IND AA+ (Stable) by India Ratings and Research. Securities with this rating are considered to have a high degree of safety regarding timely servicing of financial obligations. Such securities carry very low credit risk.
How is the company doing in terms of profits?
Its consolidated profits are as below:
FY2020 – Rs 1,054 Crores
FY2021 – Rs 1,521 Crores
FY2022 – Rs 2,158 Crores
FY2023 – Rs 2,676 Crores
Why to invest in these Cholamandalam Finance NCD?
1) These NCD’s offer good interest rates up to 8.4% per annum.
2) Company margins are improving year on year. This would help NCD investors to reduce the default risks in future.
3) These are secured NCDs. I always ask investors to invest in secured NCDs as in case the company gets wind-up / shut down for some reason, investors would still get preference in repayment of capital.
Why not to invest in these NCDs?
1) Currently SFB banks are offering similar interest rates, hence Cholamandalam NCD issue may be not that attractive.
2) Company might face disruption in its sources of funding which can affect the growth of the company
3) Company growth prospectus depends on the overall Indian automotive market and, in particular, demand for LCVs, HCVs and cars and MUVs. Any down trend in such segments can affect company performance
4) Refer NCD prospectus for complete risk factors.
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Should you invest in Cholamandalam Finance July-23 NCD issue?
Cholamandalam NCD issue offers high interest rates. These NCDs are rated as AA+ by ICRA and India Research Ratings. It offers short to medium term tenure NCDs which are good for investment. These are secured NCDs too.
On the other side, small finance banks are offering similar interest rates on the FD schemes. There are risks involved in investing in NBFC company NCD which I keep re-iterating in all these reviews.
Investors who understand all these pros and cons can invest in these NCDs.
Source RHP: Cholamandalam Investment July-22 NCD issue RHP
FAQs on Chlamandalam NCD Issue Jul-2023
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The only thing which intrigues me is how Indiabulls Housing Finance with same rating of AA Stable gave 10.15% whle Cholamandam with same rating of AA Stable is giving 8.4% – a huge difference 1.75%.
My guess is that there is something which is not taken into account by the rating agencies in one case or other, or, there is something which we are not able to understand or missing.
Its just brand the size of the company which I feel that makes such huge difference
I want blank application forms for recent NCD issues