Nomura India Investment Fund Mother Fund, a subsidiary of the Japanese financial giant Nomura Holdings, has acquired a significant stake in Cholamandalam Financial Holdings Ltd, a diversified financial services company, in an open market transaction on Friday.
According to the bulk deal data available with BSE, Nomura India Investment Fund Mother Fund purchased 14,51,000 shares of Cholamandalam Financial Holdings at an average price of Rs 1,145.30 apiece, taking the transaction size to Rs 166.18 crore.
Meanwhile, promoter of Cholamandalam Financial Holdings Ambadi Enterprises Ltd offloaded 10.58 lakh shares at an average price of Rs 1,151.02. This took the deal value to Rs 121.80 crore.
A strategic move by Nomura India
Nomura India’s move to buy Cholamandalam Financial shares is seen as a strategic investment in the Indian financial sector, which has been witnessing a strong recovery from the pandemic-induced slowdown.
Cholamandalam Financial Holdings is the holding company of Cholamandalam Investment and Finance Company Ltd (CIFCL), one of the leading non-banking financial companies (NBFCs) in India, and Cholamandalam MS General Insurance Company Ltd (CMSGICL), a joint venture with Mitsui Sumitomo Insurance Company Ltd of Japan.
CIFCL offers a wide range of products and services such as vehicle finance, home loans, business loans, rural and agri loans, stock broking, and wealth management. CMSGICL provides general insurance solutions for individuals and corporations.
Cholamandalam Financial Holdings reported a consolidated net profit of Rs 431.29 crore for the quarter ended June 30, 2023, up 28.2 percent from Rs 336.49 crore in the same quarter last year. Its total income rose 9.6 percent to Rs 2,940.72 crore from Rs 2,683.15 crore.
A positive outlook for Cholamandalam Financial
Analysts are bullish on Cholamandalam Financial’s prospects, given its strong performance, diversified portfolio, robust capital adequacy, and healthy asset quality.
According to a report by ICICI Securities, Cholamandalam Financial is well-positioned to benefit from the revival in rural demand and vehicle sales, as well as the growth opportunities in the affordable housing segment.
The report also noted that Cholamandalam Financial has maintained its credit cost guidance at 2-2.5 percent for FY24, despite the impact of the second wave of Covid-19. It also expects the company to deliver a return on equity (ROE) of 18-19 percent over FY23 -24.
Nomura India’s investment in Cholamandalam Financial is likely to boost its confidence and visibility in the Indian market, as well as enhance its synergies with its Japanese partner Mitsui Sumitomo.
Shares of Cholamandalam Financial Holdings fell 0.97 percent to close at Rs 1,191.75 apiece on BSE on Friday.
This post Nomura India snaps up Cholamandalam Financial shares in a mega deal worth Rs 166 crore was originally published at Finance Crave
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