Buzzing Stock: Shares of Cholamandalam Finance have rallied 22% in a month

The NBFC recently announced plans to acquire a 72.12% stake in fintech payment solutions provider Payswiff Technologies Private Ltd for Rs 450 crore.

Shares of Cholamandalam Investment and Finance Company Limited has rallied 22% in one month and 15% since the beginning of the year 2022. Let us understand the drivers behind the stock price movement.

Part of the Chennai-based Murugappa group, Cholamandalam Investment and Finance Company Limited is a diversified non-banking finance company that provides vehicle finance, home loans, home equity loans, loans against property (LAP), small and medium enterprises (SME) loans and agricultural loans, investment advisory services, stockbroking and a variety of other financial services to customers.

In the quarter ended September 2021, the NBFC had total assets under management as of Rs 75,063 crore as against Rs 74,471 crore at the same time last year. The aggregate disbursements during the quarter stood at Rs 8706 crore as compared to Rs 6457 crore in Q2FY21, representing a growth of 35% YoY. Vehicle finance disbursements grew 29% YoY at Rs 6161 crore, while the LAP business disbursed Rs 1736 crore, growing 65% YoY. Home loans saw disbursement of Rs 494 crore, up by 29% YoY. NII excluding other income stood at Rs 1,269 crore, a growth of 8.2% YoY in Q2FY22. Operating profits stood at Rs 875 crore, down 3% YoY on higher operating expenses. The asset quality at end of September 2021, represented by Stage 3 assets stood at 6.16% with provision coverage of 36.45%, as against 6.79% as at end of June 2021 with provision coverage of 35.51%. PAT grew 40% YoY to Rs 607 crore in Q2FY22.

Earlier this week, the NBFC announced plans to acquire a 72.12% stake in fintech payment solutions provider Payswiff Technologies Private Ltd for Rs 450 crore. The total investment will result in the company holding up to 72.12% of the equity capital of Payswiff on a fully diluted basis and Payswiff consequently will become a subsidiary of the company.

Payswiff is engaged in the business of enabling online payment gateway services for e-commerce businesses and provides e-commerce solutions. It is an omnichannel payment transaction solution that lets business owners accept payments from their customers in-store, at-home deliveries, online, and on-the-go using mPOS and POS solutions. The proposed acquisition is in line with the long-term strategy of the company to explore and expand in the entire lending ecosystem model particularly in the SME segment. This is one of the aspects driving stock price movement.

At 2.50 pm on Tuesday, the stock of Cholamandalam Investment and Finance Company was seen trading at Rs 614.90, up by 2.41% or Rs 14.45 per share as against a 0.74% decline on the benchmark index. The 52-week high of the scrip is recorded at Rs 667.50 and the 52-week low at Rs 391 on the BSE.