CRISIL has assigned the “AAA/Stable” rating to the Rs 500-crore perpetual bonds issue and the Rs 15,000-crore NCDs. The rating reflects the benefits that the NBFC derives from its majority owner HDFC Bank. The ratings are also underpinned by the company's established presence in the retail finance
space, and its healthy capitalisation and earnings profile. HDB Finance
is now expanding into consumer durable financing, digital products loans and other related segments. Apart from its traditional focus on the self-employed segment in non-metros, the company has now widened its reach to metro cities.With a diversified product offering and a pan-Indian presence, growth for HDB Finance
is expected to be above the industry average over the medium term.
Its capitalisation remains healthy, as reflected in tier-1 capital adequacy ratio (CAR) of 12.5 per cent, and the overall CAR of 18.1 per cent as on June 30. Its net-worth expanded to around Rs 7,237 crore as on June 30, from Rs 7,178 crore as on March 31 this year.
CRISIL said HDB Finance’s overall asset quality remains adequate, but gross non-performing asset (NPA) has risen to 2.3 per cent as on June 30, compared to 1.78 per cent as on March 31. The increase in gross NPA was mainly on account of increased slippages in the asset financing book.
Asset quality in the micro, small and medium enterprises (MSME) segment and loans against property (LAP) would be a key monitorable.
This stems from the sensitivity of such borrowers to an environment of prolonged liquidity tightness.
Delinquencies in these loans are not high currently, owing to strong credit appraisal and risk-mitigating mechanisms. But if the liquidity situation does not stabilise, asset quality challenges could manifest, CRISIL said.