press release au housing finance limited - … housing finance... · press release au housing...
TRANSCRIPT
1 Credit Analysis & Research Limited
Press Release
AU Housing Finance Limited
March 14, 2017
Ratings
Facilities Amount (Rs. crore)
Ratings1 Rating Action
Long-term bank facilities 385
CARE A+; Stable (Single A Plus; Outlook:
Stable)
Assigned
Total Bank facilities 385 (Three Hundred Eighty
Five crore only)
Proposed Commercial Paper (CP) issue
50 (Rupees Fifty crore only)
CARE A1+ (A One Plus)
Assigned
Details of instruments/facilities in Annexure-1 Detailed Rationale & Key Rating Drivers
The rating assigned to AU Housing Finance Ltd (AHFL) derives strength from the experienced management team, robust
capitalization, comfortable resource and liquidity profile, adequate risk management and control systems put in place by
the company and healthy financial risk profile marked by profitable growth, comfortable asset quality and strong growth
opportunities in the affordable housing segment.
These rating strengths, are however, partially offset by the limited track record of operations, low seasoning of loan
portfolio along with geographical concentration and exposure to the vulnerable borrower segment making AHFL
susceptible to asset quality risk.
Going forward, the ability of the company to grow its loan portfolio while maintaining profitability, asset quality and
increasing geographical diversification, would be the key rating sensitivities.
Detailed description of the key rating drivers
Key Rating Strengths
Strong Board of Directors and experienced management team: The company was promoted by AU Financiers India Ltd
(AUFL, rated CARE A+), a RBI registered NBFC. In June 2016, AUFL divested majority stake in AHFL to two private equity
(PE) investors – Kedaara Capital and Partners Group to comply with RBI guidelines for setting up Small Finance Bank,
which cumulatively hold 88.32% equity stake in the company as of December 31, 2016. The company has a strong Board
comprising of 7 experienced professionals including one Executive Director, 2 Nominee Directors, 2 Directors on behalf of
the PE investors, and 2 Independent Directors. The management team is headed by Mr Sushil Kumar Agarwal, Whole-
time Director and CEO who is supported by an experienced second line of management with vast experience in the
finance and housing finance industry.
Robust capitalization: The Capital adequacy ratio (CAR) of the company remains comfortable led by regular equity
infusion by the promoters and investors. CAR stood at 30.37% as on March 31, 2016 which further improved to 39.15% as
on December 31, 2016 following equity infusion of Rs.202 crore in June 2016.
Comfortable resource and liquidity profile: The borrowing profile of AHFL is well diversified with term loans raised from
banks, National Housing Bank and other Financial Institutions and funds raised through NCDs, subordinate debt and
working capital lines from banks. The company has also built AUM through securitization/assignment which stood at
Rs.254 crore as on December 31, 2016.Furthermore, AHFL has well matched the tenure of its housing loan book and the
1Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications.
2 Credit Analysis & Research Limited
Press Release
borrowings tenor, rendering the liquidity profile of the company as comfortable with no negative cumulative mismatches
across the time buckets as on December 31, 2016.
Adequate risk management and control systems: The company has put in place strong credit appraisal mechanisms and
integrated MIS systems. The company also follows conservative provisioning policy, providing for provisions for
contingencies over and above the provisions specified by NHB guidelines.
Healthy financial risk profile: The AUM of the company has grown at a CAGR of 112% over FY13-FY16 with AUM
outstanding at Rs.1680 crore as on March 31, 2016. The AUM further grew to Rs.2299 crore as on December 31, 2016
with disbursements of Rs.841 crore in 9MFY17. The profitability of the company is healthy with AHFL reporting NIM and
ROTA of 5.87% and 2.49% respectively in FY16. During 9MFY17, the company reported PAT of Rs.38.46 crore on total
income of Rs.221.43 crore. The ROTA (annualized) stood at 2.63% in 9MFY17. AHFL has been able to maintain
comfortable level of asset quality, given the strong control systems, low Loan-To-Value (LTV) ratio and adequate
collateral. As of March 31, 2016, the Gross NPA% and Net NPA% (on total AUM) stood at 0.48% and 0.30% respectively.
The Gross NPA and Net NPA% was marginally higher at 1.10% and 0.76% as on December 31, 2016 due to the impact of
demonetization.
Key Rating Weaknesses
Limited track record of operations and low seasoning of loan portfolio: The company started its operations in March
2012. As such, the company has limited track record of operations. With only 4 years of operation and majority of the
AUM built over the last two years, the seasoning of the loan portfolio is low and asset quality performance through
different economic cycles and geographies is yet to be established.
Exposure to vulnerable borrower segment: AHFL is focused on providing secured retail home loans to low income
borrowers in semi-urban and rural regions, who have regular cash flows but majority of them are undocumented
incomes. The customers of AHFL are a mix of self-employed (67.8% of AUM as on December 31, 2016) and salaried
workers, exposing the company to the riskier borrower segment. However, AHFL maintains low LTV ratio on its loan book
(average LTV of ~50%), mitigating this risk to some extent.
Geographical concentration: The company has presence in 6 states with Rajasthan alone accounting for 48.7% of the
AUM as on December 31, 2016.
Analytical approach: Standalone
Applicable Criteria
Criteria on assigning Outlook to Credit Ratings
CARE’s Policy on Default Recognition
Criteria for Short Term Instruments
CARE Methodology for Housing Finance Companies (HFCs)
Financial Sector –Financial Ratios
About the Company
Au Housing Finance Ltd (AHFL), a housing finance company, was incorporated in February 2011 as a subsidiary of AU
Financiers India Ltd (AUFL, rated CARE A+). It got the NHB License – Certificate of Registration on Aug 04, 2011 and
commenced operations from March 2012. In June 2016, AUFL divested majority of its shareholding to two private equity
players – Kedaara Group and Partners Group. As on December 31, 2016, Kedaara Group holds 52.55% stake in AHFL to
comply with RBI guidelines for setting up Small Finance Bank, Partners Group holds 35.77% stake, AUFL held 8.03% while
the remaining 3.66% was held by management team of AHFL. The net-worth of the company improved to Rs.446.74 crore
as on December 31, 2016 following equity infusion of Rs.202 crore by the PE investors in June 2016.
3 Credit Analysis & Research Limited
Press Release
AHFL is engaged in providing retail home loans with focus on affordable housing segment to customers in semi-urban and
rural regions. As on December 31, 2016 the company operates through a network of 74 branches in the 6 states of
Rajasthan, Gujarat, Madhya Pradesh, Maharashtra, Delhi and Haryana.
During FY16 (refers to the period April 01 to March 31) AHFL reported net profit of Rs.32.06 crore on total income of
Rs.196.98 crore. During 9MFY17, the company reported net profit of Rs.38.46 crore on total income of Rs.221.43 crore.
AHFL had assets under management (AUM) of Rs.2,299 crore as of December 31, 2016.
Status of non-cooperation with previous CRA: Not applicable
Any other information: Not applicable
Rating History for last three years: Please refer Annexure-2
Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This
classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to
[email protected] for any clarifications.
Analyst Contact:
Name: Mr Gaurav Dixit Tel: 011 – 4533 3235 Mobile: +91 97170 70079 Email: [email protected]
**For detailed Rationale Report and subscription information, please contact us at www.careratings.com
About CARE Ratings:
CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices.
Disclaimer
CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments.
In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.
4 Credit Analysis & Research Limited
Press Release
Annexure-1: Details of Instruments/Facilities
Name of the
Instrument
Date of Issuance Coupon
Rate
Maturity
Date
Size of the Issue
(Rs. crore)
Rating assigned
along with Rating
Outlook
Proposed
Commercial Paper
- - 7-364 days 50.00 CARE A1+
Fund-based - LT-
Term Loan
- - October, 2027 385.00 CARE A+; Stable
Annexure-2: Rating History of last three years
Sr. No.
Name of the Instrument/Bank
Facilities
Current Ratings Rating history
Type
Amount Outstanding (Rs. crore)
Rating
Date(s) & Rating(s)
assigned in 2016-2017
Date(s) & Rating(s)
assigned in 2015-2016
Date(s) & Rating(s)
assigned in 2014-2015
Date(s) & Rating(s)
assigned in 2013-2014
1. Commercial Paper ST 50.00 CARE A1+ - - - -
2. Fund-based - LT-Term Loan
LT 385.00 CARE A+; Stable
- - - -
5 Credit Analysis & Research Limited
Press Release
CONTACT Head Office Mumbai
Mr. Amod Khanorkar Mr. Saikat Roy
Mobile: + 91 98190 84000 Mobile: + 91 98209 98779
E-mail: [email protected] E-mail: [email protected]
CREDIT ANALYSIS & RESEARCH LIMITED
Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai - 400 022
Tel: +91-22-6754 3456 | Fax: +91-22-6754 3457 | E-mail: [email protected]
AHMEDABAD Mr. Mehul Pandya 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad - 380 015 Cell: +91-98242 56265 Tel: +91-79-4026 5656 E-mail: [email protected] BENGALURU Mr. Deepak Prajapati Unit No. 1101-1102, 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore - 560 001. Cell: +91-9099028864 Tel: +91-80-4115 0445, 4165 4529 E-mail: [email protected] CHANDIGARH Mr. Sajan Goyal SCF No. 54-55, First Floor, Phase 11, Sector 65, Mohali - 160062 Chandigarh Cell: +91 99888 05650 Tel: +91-172-5171 100 / 09 Email: [email protected] CHENNAI Mr. V Pradeep Kumar Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai - 600 002. Cell: +91 98407 54521 Tel: +91-44-2849 7812 / 0811 Email: [email protected] COIMBATORE Mr. V Pradeep Kumar T-3, 3rd Floor, Manchester Square
Puliakulam Road, Coimbatore - 641 037.
Tel: +91-422-4332399 / 4502399
Email: [email protected] HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, 3-6-502, Himayat Nagar, Hyderabad - 500 029. Cell : + 91 90520 00521 Tel: +91-40-4010 2030 E-mail: [email protected]
JAIPUR Mr. Nikhil Soni 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur - 302 016. Cell: +91 – 95490 33222 Tel: +91-141-402 0213 / 14 E-mail: [email protected] KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata - 700 071. Cell: +91-98319 67110 Tel: +91-33- 4018 1600 E-mail: [email protected] NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi - 110 055. Cell: +91-98117 45677 Tel: +91-11-4533 3200 E-mail: [email protected] PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune - 411 015. Cell: +91-98361 07331 Tel: +91-20- 4000 9000 E-mail: [email protected]
CIN - L67190MH1993PLC071691