Rationale

The ratings consider Toyota Financial Services India Limited’s (TFSIN) strong parentage, given its position as a wholly-owned subsidiary of Toyota Financial Services Corporation (TFSC), which is a wholly-owned subsidiary of Toyota Motor Corporation (TMC/ultimate parent; rated A1 (Positive) by Moody’s). TFSIN receives significant financial and management support from TFSC and TMC by virtue of its parentage. Its board of directors and senior management team have representatives from TFSC. This, together with the shared brand name and integration with the TMC Group, reflects TFSIN’s significance to the Group. The ratings also factor in TFSIN’s comfortable capitalisation profile, supported by timely equity support from the parent, robust underwriting practices and risk management policies, and diversified borrowing profile. However, TFSIN’s margins continue to remain under pressure on account of the competitive scenario and the rising interest rates. This resulted in the net profitability (PAT / AMA) declining to 0.5% in FY2024 from 1.4% in FY2023. Incrementally, TFSIN’s profitability is expected to stabilise during FY2025, in line with expected stabilisation in cost of funds. The Stable outlook on the [ICRA]AAA rating reflects ICRA’s opinion on TFSIN’s comfortable capitalisation and strong liquidity position and the expectation that it would continue to benefit from the strong support of the TMC Group. ICRA has simultaneously reaffirmed and withdrawn the long-term rating outstanding on the Rs.675-crore non-convertible debentures (NCDs) as the instruments have been fully repaid. The rating has been withdrawn in accordance with ICRA’s policy on the withdrawal of credit ratings.