Shriram Home Finance Limited, a leading affordable housing finance provider, said today that Crisil, India Ratings, and Care Ratings have upgraded the company’s credit rating to AA+ with a Stable Outlook. With favourable implications, the long-term rating has been upgraded from AA and removed from the rating watch.
The rating move comes after Shriram City Union Finance Limited and Shriram Transport Finance Company Limited merged to establish Shriram Finance Ltd. Shriram Housing Finance is now a subsidiary of Shriram Finance, which owns 85.02 per cent of the company.
Crisil Rating report highlighted: “Shriram Housing’s strategic importance has been consistently growing within the Shriram eco system since it widens the product offerings in the financial services space while simultaneously adding scale and granularity into its already retail-oriented lending book. Also, conducting the home loan business through a housing finance company allows for more efficient use of capital. In addition to its revamped business model, SHFL has been improving its sourcing profile and collection efforts. 90 per cent of the current outstanding loan book of SHFL has been sourced after January 2019, which has 90+ DPD of 0.38 per cent. The GNPA and NNPA have improved to 1.0 per cent and 0.7 per cent respectively as on September 30, 2022 from 2.8 per cent and 2.2 per cent respectively as on March 31, 2019. Furthermore, Shriram Finance has the financial flexibility to infuse capital into the company to support its growth.”
India Ratings report highlighted: “The key rating drivers are 1) Support-driven rating as part of the larger Shriram Group, 2) Comfortable Capitalisation and leverage at 4.1x as on September 30, 2022, supported by equity infusion of Rs. 500 Cr. by the parent in FY22, 3) Diverse Resource Portfolio and Low dependence on capital market borrowings, 4) Adequate Liquidity and 5) Improved asset quality”
Care Rating report highlighted: “By virtue of the strong parentage, SHFL also stands to benefit from the established track record of the group in lending to the self-employed segment in Tier-II and smaller towns, which is the customer profile for SHFL as well. The ratings take note of the significant growth in AUM over the last 3.5 years from below Rs. 2000 Crs. in Mar-19 to more than Rs. 6500 Cr. in Sep-22.”
