A company’s classification as large-, mid-, or small-cap depends on its market capitalisation. To move up the ranks, it must grow faster than the overall market—simply keeping pace won’t cut it, as market cap thresholds rise alongside broader market growth. In essence, a small-cap must meaningfully outperform to break into the mid-cap category.
Most large caps didn’t start at the top, they earned their status through consistent growth and pivotal milestones. This week, we spotlight Cholamandalam Finance, (part of the Chennai-based business conglomerate Murugappa Group), one of India’s premier NBFCs (non-banking financial corporations), and how it grew.
How it started
Cholamandalam Investment and Finance Company Limited (Chola) – the financial services arm of the Murugappa Group – has undergone remarkable growth since its stock market listing in the mid-1990s. Founded in 1978 as an equipment financing firm, Chola today is a diversified non-bank financial company (NBFC) offering a wide spectrum of financial products.
1978: Incorporated as the financial services arm of the Murugappa Group. Began operations with a focus on equipment financing.
1980: Raised public funds through a modest share issue (150,000 equity shares at par) to widen ownership and strengthen capital base.
1994: Chola Securities founded as a subsidiary of Cholamandalam Investment and Finance Company Limited.
1996: Officially listed on the Bombay Stock Exchange (BSE) and later on the National Stock Exchange (NSE). Expanded into vehicle finance.
1996: Cholamandalam AMC set up, ventures into mutual funds.
2001: Launched Cholamandalam MS General Insurance, a joint venture with Mitsui Sumitomo Insurance, Japan.
2005: JV between Chola AMC and DBS Bank (Singapore), with DBS acquiring 37.5% stake. The company was renamed Cholamandalam DBS Finance Ltd. Forayed deeper into home equity, wealth management, and corporate finance.
2010: DBS exits the joint venture by selling its stake back to the Murugappa Group.
2015–2018: Focused on digital transformation and building out its SME and home loan portfolios. Rolled out new lending platforms and credit scoring models.
2022: Acquired 71.94% stake in Payswiff Technologies, an omnichannel digital payment solutions provider, for ₹450 crore, signalling a strong push into the fintech and merchant acquiring space.
2024–2025: AUM grew to ₹1.99 lakh crore by mid-2025; network expanded to 1,613 branches with a customer base exceeding 4.3 million.
Key growth drivers and success factors
Cholamandalam Finance today ranks among the leading NBFCs in India, operating in a highly competitive space. Its position as a market leader has been possible thanks to a vast network, a focus on the core business, and investing in digital transformation.
Geographical reach: Cholamandalam Finance has grown its reach across India massively since listing in 1996. Initially concentrated around its Chennai headquarters in South India, the company expanded at a steady pace through the West and North, establishing a few hundred branches by the mid-2000s. In the past few years, Cholamandalam Finance expanded its network rapidly across rural and semi-urban areas, nearly doubling its branch count.
In FY2017–18 the company operated 870 branches, which grew to 1,145 branches by FY2021–22 and further to 1,577 branches as on Dec 31, 2024. As of 2025, Cholamandalam Finance operates from 1613 branches and 724 rural service centres of Resident Locations across India with assets under management above ₹1,99,000 crore.
Rural focus: A key driver of Chola’s growth is its deep focus on India’s rural heartland. As of 2024, nearly 91% of its branches are located in Tier-III to Tier-VI towns, with over 85% in rural areas, around 10% in semi-urban zones, and just 5% in metros. This rural-first strategy aligns closely with Chola’s core customer base—truck owners, tractor-buying farmers, and small-town entrepreneurs—giving it a strong edge in meeting rural credit demand, a segment that has rebounded swiftly in recent years.
Cholamandalam Finance’s network also reflects a balanced regional presence: about 30% of branches are in South India, 24% each in the North and East, and 22% in the West. Its strategic reach into underserved rural markets has been a major factor behind the sustained growth of its vehicle and agri-loan portfolio.
Diversification: Cholamandalam Finance’s growth is built on a strong foundation in vehicle financing, which became its core business after entering the auto finance space in 1991–92. It is now a leading financier of commercial vehicles, passenger vehicles, tractors, and other auto segments, primarily serving retail and small fleet owners. For FY25, Vehicle Finance (VF) makes up 55% of its loan book.
In 2006, the company diversified into Home Equity (loan-against-property) business, which steadily grew into its second-largest segment, accounting for 21% of disbursements in FY25. This portfolio consists mainly of mortgages secured against residential or commercial property.
In 2017–18, Chola expanded into housing finance, establishing a dedicated subsidiary for home purchase loans. More recently, in 2022, it entered new retail and MSME segments with digitally-led, short- to medium-term loans under Consumer & Small Enterprise Loans (CSEL), Secured Business & Personal Loans (SBPL), and SME loans, targeting individuals and small businesses.
Refocus on core business: Over the years, Cholamandalam Finance ventured into a variety of financial services to build a comprehensive offerings portfolio, like Chola Securities, a stock broking and wealth management subsidiary; the mutual fund business Cholamandalam AMC; and even an experiment in unsecured loans and consumer durable financing. However, by 2009, the company made a conscious decision to exit non-core businesses, selling Chola AMC to L&T Finance and exiting the consumer durables financing space. This approach helped the company get back to a disciplined focus and expansion on its core businesses in lending.
Digital transformation: A major strategic focus for Chola has been technology and digital transformation to enhance efficiency and customer experience. In 2015, it partnered with Cognizant to digitise its vehicle finance operations end-to-end, from loan origination to collections—an early move that streamlined processes and reduced costs. By the late 2010s, Chola had invested in advanced analytics for credit scoring and launched a customer-facing mobile app.
Its 2021–22 partnerships with fintechs like BankBazaar and KreditBee for consumer loan sourcing furthered its digital strategy. These IT investments enabled a shift to eKYC, e-signatures, and cloud-based loan management, proving especially valuable during the pandemic. Embracing tech has helped Chola accelerate turnaround times and scale new businesses like CSEL through digital channels.
Cholamandalam Finance today — and beyond
Cholamandalam Finance started operations in vehicle financing but has since grown into a market behemoth, offering a wide range of financial products and services. Today, it ranks among the top 100 companies on the Indian stock exchanges, with a market capitalisation upwards of ₹1,19, 000 crore. And this growth has been achieved while improving profitability and maintaining asset quality. For FY25, the company reported PAT of ₹4,259 crore, up from ₹3,423 crore in FY24, registering a 24% growth.
Cholamandalam Finance’s leadership has shown agility in navigating challenges (like exiting risky assets during downturns), foresight in capital and technology investments, and a clear focus on core strengths. These strategic choices have driven its transformation from a regional lender to a diversified, pan-India player over the past 25+ years
Sources
Cholamandalam Finance Annual Report 2021-2022
Cholamandalam Finance Annual Report 2024-25
Care Edge Ratings April 2025: Cholamandalam Finance
HDFC Securities Retail Research: Cholamandalam Investment and Finance Company Ltd
Financial Express: Chola bets on fintech tie-ups to drive credit growth in SMEs, consumers
Moneycontrol: Cholamandalam Finance
PE International: Cholamandalam MS General Insurance Company Ltd