Cholamandalam Invest drops 7%; Tube Investments, CG Power up 3%; Here's why
Cholamandalam Investment stock fell as much as 7.21 per cent during the day to ₹1,678 per share, the biggest intraday fall since October 28, 2024
 "Cholamandalam Invest drops 7%; Tube Investments, CG Power up 3%; Here's why")
Shares of Cholamandalam Investment and Finance Company Ltd. tumbled by more than 7 per cent on Thursday amid reports that Vellayan Subbiah would divest his exposure to the company. He will consolidate his position in Tube Investments of India and CG Power and Industrial Solutions, according to reports.
The company stock fell as much as 7.21 per cent during the day to ₹1,678 per share, the biggest intraday fall since October 28, 2024. The Cholamandalam Investment and Finance Company stock pared losses to trade 2 per cent lower at ₹1,720 apiece, compared to a 0.15 per cent advance in Nifty 50 as of 11:35 AM. Meanwhile, shares of Tube Investments of India and CG Power and Industrial Solutions rose over 3 per cent each.
Shares of Cholamandalam Investment snapped a three-day winning streak and currently trade at 9.2 times the average 30-day trading volume, according to Bloomberg. The counter has risen 0.8 per cent this year, compared to a 2.3 per cent advance in the benchmark Nifty 50. Cholamandalam Investment has a total market capitalisation of ₹1.46 trillion. FOLLOW LATEST STOCK MARKET UPDATES LIVE
Why did Cholamandalam Investment shares fall?
According to media reports, Subbiah reached a settlement with other branches of the promoter family to realign ownership across key group companies. The agreement is expected to enable him to exit stake exposure in Cholamandalam Investment and Finance Company, while consolidating his holdings in Tube Investments of India and CG Power and Industrial Solutions, a news report said. Business Standard has not verified the veracity of the news.
As part of the proposed arrangement, Subbiah is likely to relinquish his interest in Cholamandalam Investment, and instead strengthen his alignment with Tube Investments and CG Power. This may involve taking over or retaining promoter-level stakes in these companies within the extended family structure, reports said. The settlement follows over two years of negotiations among the promoter branches, it added.
Cholamandalam Investment outlook
UBS has maintained its 'Buy' rating on Cholamandalam Investment after the lender reported steady growth, albeit with higher credit costs. The brokerage said the company delivered assets under management (AUM) growth of 21 per cent year-on-year (Y-o-Y), marginally ahead of UBS estimates. Disbursements rose 16 per cent Y-o-Y, above expectations, UBS said.
Net interest income (NII) and pre-provision operating profit (PPOP) both grew 24 per cent Y-o-Y, broadly in line with estimates, the brokerages said. Net interest margins expanded by 8 basis points quarter-on-quarter (Q-o-Q), largely driven by a lower cost of funds. READ | E2E Networks shares rise 4% as company launches QIP at ₹2,630 floor price
While UBS noted a miss on credit costs, it highlighted that management remains confident of achieving its 20 per cent growth guidance for the year. The company expects home loans to sustain around 28 per cent growth over the next two years. It also indicated that January disbursements were already higher, with management expressing confidence that the fourth quarter will outperform the third quarter in terms of disbursement growth.
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