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Press Releases
06-Dec-19
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India Infoline Finance Limited: Ratings assigned
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Rationale
While ICRA used to take a consolidated view of IIFL
Finance Limited (erstwhile IIFL Holdings Limited), following the scheme of
demerger (effective May 2019), there has been a restructuring, thereby creating
three separate entities – India Infoline Finance Limited (lending operations),
IIFL Wealth Management Limited (wealth and asset management) and IIFL
Securities Limited (capital markets and broking business). The ratings for
India Infoline Finance Limited and IIFL Home Finance Limited are based on a
consolidated view of India Infoline Finance Limited and its subsidiaries
(referred to as IIFL/Group/company), given their common senior management team
and strong financial and operational synergies. The rating reaffirmation
favourably factors in the group's diversified lending portfolio with assets
under management (AUM) of Rs. 35,007 crore as on September 30, 2019 (retail
portfolio accounted for 87%) and the widespread presence across 26 states with
2,309 branches. The ratings also consider the adequate capitalisation of the
Group. The consolidated net worth stood at Rs. 4,579 crore with on-book gearing
of 5.0x. ICRA notes that while the current capitalisation is adequate, in the
scenario of stress on the real estate lending book, the Group could need
additional capital depending on the likely loss given default. The ratings also
factor in the moderate profitability of IIFL. The company has been able to
increase its net interest margins (NIMs) by passing on the higher cost of funds
to its borrowers and by focussing on higher-yielding loans. However, its
ability to control credit costs will be a key driver of profitability. The Negative
outlook factors in the challenges in resource mobilisation for non-banking
finance companies (NBFCs) and housing finance companies (HFCs) in the current
operating environment, including IIFL, and the increased vulnerability in the
group's real estate lending book. While IIFL has been able to raise long-term
bank loans and NCDs, assignment and securitisation accounted for ~78% of the
incremental funds raised in H1 FY2020. As the Group has significant retail
exposures (~87% of the AUM), it has been able to assign/securitise its
portfolio, which has helped meet its liquidity requirements. While IIFL's real
estate lending book accounted for 13% of the AUM as on September 30, 2019, it
accounted for 103% of the net worth. ICRA positively notes the management's
focus on reducing the real estate lending book. Given the increased stress in
the real estate segment, the Group's ability to control slippages and reduce
its exposure to this sector in relation to the net worth remains a key
monitorable
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Previous News |
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IIFL Finance appoints nominee director
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IIFL Finance allots NCDs aggregating Rs 115 cr
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02-Sep-22
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IIFL Finance standalone net profit rises 51.42% in the June 2022 quarter
(
Results
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