India Ratings & Research has upgraded Cholamandalam Investment & Finance’s (CIFCL) long-term issuer rating to ‘AA’ from ‘AA-’. The outlook is stable. The agency has also upgraded the company’s Rs 675 crore lower Tier 2 subordinated debt to ‘AA’.
The upgrade reflects the company’s gradual bolstering pre-provison operating profitability (PPoP) through improving operating leverage which should help strengthen credit cost buffers, measured diversification of asset portfolio and demonstrated ability to raise equity at periodic intervals supporting capitalisation. The rating also factors in the company’s niche franchise and competitiveness in financing small and light commercial vehicles, management of credit costs which are lower than most peers’ and pan India diversified portfolio.
Cholamandalam Investment is among the top 5 NBFC’s in the country operating in vehicle finance, home equity, corporate and mortgage finance segments with subsidiaries in the broking and wealth advisory space.
