CRISIL has upgraded its rating of Muthoot FinCorp Ltd from ‘ A’ (Stable) to ‘A+ (Stable)’.
The CRISIL rating upgrade underscores a high degree of safety regarding the timely servicing of the company’s NCDs (non-convertible debentures) — they carry very low credit risk, a statement issued here said.
Thomas John Muthoot, Chairman and Managing Director, said: “The rating upgrade by CRISIL is very significant in strengthening the confidence of our lenders and retail investors. The upgrade will also enable the company to widen its retail and corporate investor base.”
The rating signals that Muthoot FinCorp’s business profile will continue to be supported by its established market position in the gold loan segment, strengthened by the promoters’ extensive experience in the gold loan industry, healthy asset quality, and improving earnings profile in the gold loan portfolio, he said.
During the financial year, the company, through three public issues, has raised NCDs to the tune of ₹1,138.59 crore. In addition, the company issued NCDs via private placement to banks amounting to ₹1,750 crore and raised market-linked debentures (MLD) of ₹997 crore.
The company’s gold loan business AUM (assets under management) grew 24 per cent during the last three-quarters of the current fiscal. It is expected to grow by 28 per cent for FY2020-21. The company has maintained healthy asset quality over the years, as reflected in its gross non-performing assets of 1.0-1.8 per cent under the gold loan portfolio being maintained during the past five fiscals.
In the current financial year, MFL has disbursed about ₹38,000 crore to 75 lak customers, of which 45 lakh are nano, micro or small enterprises.
The rating upgrade is the reflection of the company’s healthy performance in its core gold loan portfolio, its established position in the country’s gold loan business, its strong fundamentals, its healthy performance manifested by steady growth in assets under management, sound asset quality and increased earnings profile, the company claimed.
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