June 14 – A non-banking financial company (NBFC) backed by Life Insurance Corporation of India (LIC) has announced the successful allotment of Rs 30 crore via commercial papers, signaling strengthened liquidity management following a strong fourth-quarter performance. The company, whose shares are currently trading below Rs 50 on the stock exchanges, reported a 25 percent increase in net profit year-on-year for the quarter ending March 2025.
This move comes at a time when NBFCs are increasingly tapping into the commercial paper (CP) market to meet short-term funding requirements. The proceeds from this Rs 30 crore allotment are expected to be used to support the firm’s working capital needs and further lending operations.
Strong Financial Performance in Q4
The LIC-owned NBFC has shown improved financial results for Q4 FY24-25. Net profit rose by 25 percent compared to the same quarter last year, driven by strong demand in retail and SME lending, cost control, and reduced non-performing assets (NPAs). The total income for the quarter also saw healthy growth, supported by a wider credit portfolio and higher interest income.
Analysts attribute the improvement in profitability to disciplined underwriting practices, expanding loan disbursements, and a diversified borrower base. The company has also taken steps to digitalize its lending processes, improving turnaround times and reducing operational costs.
Commercial Paper Issuance to Strengthen Liquidity
The Rs 30 crore raised through commercial papers adds to the company’s liquidity pool, enabling it to maintain a stable funding profile amid changing interest rate conditions. Commercial papers are short-term debt instruments issued by companies to raise capital quickly, usually for durations ranging from 7 days to 1 year.
Company officials stated that this issuance reflects investor confidence in its creditworthiness and operational performance. The CPs have been placed with institutional investors at competitive rates, indicating strong demand.
Stock Performance and Market Outlook
Despite trading below Rs 50 per share, the stock has gained investor attention due to its consistent financial improvement and backing from LIC, India’s largest insurance company. Market experts believe the stock remains undervalued, considering its growth potential, asset quality, and stable governance.
With the financial year drawing to a close, this NBFC is now focusing on expanding its footprint in Tier 2 and Tier 3 cities, targeting micro, small, and medium enterprises (MSMEs), and exploring co-lending partnerships with banks. It also plans to raise additional funds through long-term instruments in the coming quarters.
Conclusion
The combination of strong quarterly earnings and strategic fundraising through commercial papers positions the LIC-backed NBFC well for continued growth. Its improved fundamentals, efficient capital usage, and focus on underserved lending segments are likely to attract further attention from both institutional and retail investors.
