India: July 01, 2016: Leading credit rating agency CRISIL has upgraded its credit rating of Manappuram Finance Ltd. to ‘AA-/Stable’ from ‘A+/Stable’. The revised rating is applicable to the long-term bank facility and non-convertible debentures of the company.
The new ratings reflect the strong track record of Manappuram Finance’s promoters in financing against gold jewellery, adequate capitalisation and stable funding profile, and strong profitability.
The upgrade reflects improvement in business risk profile driven by changed business model, and stable operating environment backed by an established regulatory regime.
The rating upgrade also factors in the company’s strong earnings profile. It may be recalled that the company had revised its business model in June 2014 by introducing short-term products with 3, 6, and 9 months’ tenure and increasing focus on, monthly interest collection and getting new clients. Short-tenure products (over 80% of portfolio comprises products with 3 months’ tenure) reduce risk of interest reversals on delinquent loans.
The rating on short-term debt of the company was reaffirmed at ‘A1+’.
About Manappuram Finance Ltd.
Manappuram Finance Ltd. is one of India’s leading gold loans NBFCs engaged in providing finance against used household gold ornaments. Incorporated in 1992, the company has been promoted by Mr. V.P. Nandakumar (current MD & CEO) whose family has been involved in gold loans since 1949. It is headquartered at Valapad in the Thrissur District of Kerala. The company went public in August 1995 and its shares are listed on the stock exchanges of Mumbai, Chennai, and Kochi.
As of March 31, 2016, Manappuram Finance Ltd. had 3,293 branches across 24 states and 4 UTs with Assets under management (AUM) of Rs.114.3 billion. The company’s net worth stood at Rs.27.58 billion.