Magma Housing Finance Receives ICRA Rating for Bank Term Loan and Non-Convertible Debentures

Strategic Insights -

Magma Housing Finance, a public company with unlimited liability, has received an ICRA rating of AA- (pronounced ICRA double A minus) for its Rs. 50 crore bank term loan and Rs. 50 crore non-convertible debentures program. The rating outlook is stable, indicating a stable long-term credit profile for the company. The ICRA ratings reflect the company's diversified loan book, experienced management team, and strong financial flexibility.

Key Takeaways:

  • The ICRA rating of AA- for Magma Housing Finance's bank term loan and non-convertible debentures reflects the company's diversified loan book, experienced management team, and strong financial flexibility.
  • Magma Housing Finance has a diversified loan book with Rs. 19,503 crore in loan assets as of December 31, 2014, spread across various asset classes, including utility vehicles/cars, commercial vehicles, construction equipment, and mortgage loans.
  • The company's mortgage portfolio was Rs. 1,571 crore as of December 31, 2014, accounting for ~60% of the Magma group's mortgage loan book.
  • Magma has a network of 238 branches across 23 states/UTs, with a substantial rural and semi-urban presence, and a tier I capital of 11.0% as of December 31, 2014.
  • The company's loan book has a sizeable part that qualifies for priority sector funding from banks, helping to maintain competitive costs of funds.
  • The rating strengths are partly offset by deterioration in asset quality profile, moderate capitalization, and earnings profile.
  • The ability of the group to arrest deterioration in asset quality profile and maintain adequate capitalization levels is a key rating sensitivity.

Statistics:

  • ICRA rating: AA-
  • Loan book: Rs. 19,503 crore as of December 31, 2014
  • Mortgage portfolio: Rs. 1,571 crore as of December 31, 2014
  • Tier I capital: 11.0% as of December 31, 2014
  • Revenue: Rs. 159.6 crore in FY14, Rs. 133.14 crore in 9MFY15
  • PAT: Rs. 2.64 crore in FY14, Rs. 7.69 crore in 9MFY15

Sources:

  • ICRA Limited: Magma Housing Finance's rating report
  • Magma Housing Finance: About Us page
  • Magma Fincorp Limited: About Us page