Thomas John Muthoot, chairman & managing director, Muthoot FinCorp 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.”
This rating upgrade is the reflection of the company’s healthy performance in 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 (AUM), sound asset quality and increased earnings profile. The CRISIL rating upgrade also underscores a high degree of safety regarding the timely servicing of the company’s NCDs (non-convertible debentures) and they carry very low credit risk.
The company’s gold loan business AUM grew 24 per cent during the last three-quarters of the current fiscal. It is expected to grow by 28 per cent for the FY 2020-21.
The Company has maintained healthy asset quality over the years, as reflected in gross non-performing assets (GNPAs) of 1.0 -1.8 per cent under the gold Loan portfolio being maintained during the last five fiscals. As of the end of December 2020, the company’s GNPA and credit cost stood at 1.3 per cent and 0.2 per cent (annualised), respectively.
The gold loan portfolio of the company accounts for about 67 per cent of the group’s overall AUM which stood at Rs 27,000 crore on December 31, 2020 and 87 per cent of its profits. The company’s profitability has steadily improved in the past 2-3 financial years as evident by standalone return on managed assets (RoMA) of 1.7 per cent (annualised) during the last three-quarters of the current fiscal. This improvement is backed by improving the branch productivity, steady reduction in operating costs while maintaining overall low credit costs. The CRISIL Rating evidences that the Company has adequate liquidity on a standalone basis, a release issued by the company said.
The four NBFC’s under the Muthoot Pappachan Group are Muthoot FinCorp, Muthoot Capital, Muthoot Microfin, and Muthoot Housing Finance, and are primarily into gold Loans, two wheeler loans, used car loans, housing loans, small business loans, and micro enterprise loans.
In the current financial year, Muthoot FinCorp has disbursed about Rs 38,000 crore to 7.5 million customers, of which 4.5 million customers are the nano, micro, and small enterprises. Various gold loan schemes like the Super Value, Restart India Pradhan, Samudra Gold Loan, Ashwas Dinam Gold Loan for traders were introduced during the year. As part of the RestartIndia series, the latest product launched was the AtmaNirbhar Mahila Gold Loan, a gold loan product exclusively designed for Women, providing maximum permissible value for their gold with minimal interest rate.
The CRISIL 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.
During the Financial year, the company, through three Public Issues, raised NCDs to the tune of Rs. 1,138.59 crore. In addition, the company issued NCDs via private placement to banks amounting to Rs. 1,750 crore and raised Market Linked Debentures (MLD) Rs 997 crore.