Credit Research

Established in 1986, Power Finance Corporation is a financial institution in India focused on the power sector. Registered with the RBI as a NBFC and classified as an Infrastructure Finance Company by the RBI and plays a strategic role in government’s initiatives for the overall development of the power sector in India.

Aadhar Housing Finance Limited (AHFL) is a housing finance company engaged in providing housing finance to the lower-income segment of society. AHFL was set up in May 2010 and commenced operations in February 2011. As per company sources, Aadhar Housing Finance Ltd is planning to file a draft prospectus for issuance of initial public offering in India during January 2021 to raise around USD 1 billion.

COVID-19 significantly impacted Tata Motors Ltd (TML) in India, demand was already seen adversely impacted by the general economic slowdown, liquidity stress and stock corrections due to BSVI transition, was further affected by the lockdown.

Srei Infrastructure Finance Ltd raised funds through a public debt issue in May 2019, when it was rated AA+.

Cholamandalam Investment and Finance Company Limited (CIFCL) a non-banking finance company, is a part of the Chennai-based Murugappa Group of companies. It has a housing loan and SME loan portfolio, which largely constitutes the rest of the portfolio. The proportion of the portfolio in the SME segment is expected to remain modest over the next three years as the company is expected to concentrate on the vehicle finance, HE and housing finance segments. CIFCL has two wholly-owned subsidiaries viz., Cholamandalam Home Finance Limited (erstwhile Cholamandalam Distribution Services Limited) and Cholamandalam Securities Limited, and an associate entity – White Data Systems India Private Limited (31% stake).

Cholamandalam MS General Insurance Company Limited (CMICL) is a joint venture between CFHL (part of Murugappa Group) and MSI. CMICL offers a wide range of products including motor, accident, engineering, health, liability, marine, property, travel and rural insurance and caters to individuals as well as corporates. The company has a network of over 90 branches across the country, with its head office in Chennai.

Tata Steel Ltd. (TSL), founded in 1907, is the flagship company of the Tata Group. The company operates in 26 countries and has a commercial presence in more than 50 countries. The product mix of the company includes flat steel products such as HR Coils, CR Coils, Galvanized Steel, Long Products such as Wire Rods, Rebars, Ferro Alloys, Tubes, Bearings, Wires, etc.

The legal battle between India's Telecom operators and the Government of India led to concerns around the survival of Vodafone Idea Ltd. Supreme Court has asked the telecom operators to pay 10% of the balance dues before March 2021.

AAA-rated India Grid Trust is a power sector Invit.

Vedanta is issuing high yield bonds to repar debt maturing in 2021, indicating that the company does not have funds generated internally to service its short term debt. This is very negative for the credit as if the company is not able to start generating funds to service debt, the high interest cost for such new debt can prove to be a huge credit negative factor.

IndusInd Bank (IIB)- IIB has a pan-India presence with 1,558 branches and 2,453 ATMs as on December 31, 2018.

Muthoot HomeFin (MHF)- MHF is a non-deposit taking housing finance company and was registered with the National Housing Bank on May 19, 2014.

L&T Finance is a wholly-owned subsidiary of L&T Finance Holdings, which, in turn, is majority owned by L&T.

Srei Infrastructure Finance Ltd(SREI)– Srei infra has a history of over 25 years in the infrastructure sector and is one of India’s largest holistic infrastructure institution.

Magma FinCorp(Magma)– Magma is a non-banking finance company, incorporated on 18th December 1978 as ARM Group Enterprises Private Limited. In 2008, the company’s name was changed to Magma Fincorp Limited.

Deposit Taking NBFC (NBFC-ND-SI) registered with the RBI and operates as the flagship company under the “JM Financial” brand.

ECL Finance is a part of Edelweiss group, ECL Finance is a non-deposit taking NBFC, which focuses on offering a broad suite of secured corporate loan products and retail loan products, which are customized to suit the needs of corporates, SMEs and individuals.

Muthoot Finance– is the largest gold loan NBFC in India in terms of loan portfolio.

IBCF is a non-deposit taking NBFC registered with the RBI and a 100% subsidiary of Indiabulls Ventures Limited, a listed Indian company.

India Infoline Finance Limited (IIFL) is a Systemically Important RBI registered non deposit taking Non-Banking Financial Company (NBFC-ND-SI).

IBHF share price fell by 20% in the last one month after credit rating agency Moody’s downgraded the credit rating of the company’s foreign-currency senior secured bonds from “Ba1 to Ba2” and poor quarterly earnings performance for q1fy20.

Shriram City Union Finance Limited (SCUF)- Shriram City Union Finance (Shriram City) was established in 1986 and is part of the three-decade-old Shriram Group.

Shriram City Union Finance Limited (SCUF)- Shriram City Union Finance (Shriram City) was established in 1986 and is part of the three-decade-old Shriram Group.

In Feb 2020, Indiabulls Housing Finance Ltd has been downgraded to AA from AA+ by both ICRA and CRISIL.

ECLF is the primary NBFC arm of Edelweiss Financial Services Limited (EFSL) with 100% shareholding.

Edelweiss Finance and Investment Limited was originally incorporated as a Private Limited company as “Crossborder Investments Private Limited” on October 27, 1994, in Maharashtra.

JM Financial Products Limited(JMFPL)– JM Financial Products Ltd is a Non – Deposit Taking NBFC (NBFC-ND-SI) registered with the RBI and operates as the flagship company under the “JM Financial” brand.

In September 2018 IBHF share price and bond prices tanked as liquidity concerns on the housing finance companies hit all housing finance stocks and bonds.

Tata Motor Finance credit risk is largely linked to the support of Tata Motors, which in turn is supported by Tata Sons. TCS the flagship company of Tata Group, provides all the financial strength to Tata Sons.

During July-September 2020 period Bajaj Finance AUM grew 1% to Rs 1370.90 billion against Q2FY20. The Company estimates AUM growth for FY21 at 6-7%. Moratorium book stood at 8% which was at 15.7% in Q1FY21.

Founded in July 1992 and promoted by Mr V P Nandakumar, Manappuram Finance(MAFIL) is the flagship company of the Manappuram group. It is a non-deposit-taking NBFC that provides finance against personal gold ornaments. As of 31st March 2020, the company had 4622 branches across India. The company went public in August 1995, with shares listed on the stock exchanges of Chennai, Kochi, and Mumbai (Bombay Stock Exchange and National Stock Exchange). Over the past three years, the Manappuram group has diversified into other businesses such as microfinance, vehicle finance, loans against property, and affordable housing finance. It also has presence in insurance broking business. As of June 30, 2020, its AUM stood at Rs 253 billion with customer base of 42.6 million.

Muthoot Finance– is the largest gold loan NBFC in India in terms of loan portfolio. Muthoot Finance provides personal loans and business loans secured by gold jewellery, or gold loans, primarily to individuals who possess gold jewelry but are not able to access formal credit within a reasonable time, or to whom credit may not be available at all, to meet unanticipated or other short-term liquidity requirements. Muthoot Finance gross loan AUM stood at around Rs 425.62 billion as of June 2020.

Tata Cleantech Capital Limited (TCCL) was formed in 2011 as a joint venture between Tata Capital Limited (TCL) and International Finance Corporation (IFC). Tata Capital owns 80.5% share while 19.5% is owned by IFC. TCCL is a Systemically Important Non-Deposit Accepting Non-Banking Financial Company (SI-ND-NBFC) registered with the Reserve Bank of India and classified as an Infrastructure Finance Company (“NBFC-IFC”). TCCL offers finance and advisory services for projects in renewable energy, energy efficiency, waste management, water management and other infrastructure projects.

CANARA bank is a Public sector bank in India with branches across the globe. Through its non-banking subsidiaries and associate companies, the bank offers asset management, insurance, and retail and institutional broking services.

RBI registered Systemically Important Non-Deposit Accepting Non-Banking Financial Company (NBFC). The Company targets retail, corporate and institutional customers

Advantages for investors: • Product Structure– ETF matures like a bond as it has a fixed maturity date and predetermined return if held till maturity. • Trades like ETF– As it will be listed on the exchange, liquidity will be enhanced by market makers. Investors can make entry and exit funds at the time of preference. • Diversified Fund- Raised money will be invested in AAA-rated GOI owned companies bonds which minimize the default risk.

Embassy Office Parks is India’s first listed REIT. Embassy REIT comprises 26.2 million square feet (msf) of completed and operational commercial properties across India. Company targetting seven Grade A office parks and four city-center office buildings in India’s performing office markets of Bengaluru, Mumbai, Pune and the National Capital Region (NCR). The portfolio has over 160 blue-chip corporate occupiers and comprises 78 buildings with strategic amenities, including two completed hotels, two under-construction hotels, and a 100MW(AC) solar park that supplies renewable energy to park.

Uttar Pradesh Power Corporation Ltd (UPPCL) was founded in November 1999 by the Government of Uttar Pradesh in pursuance of the reform-restructuring of the erstwhile Uttar Pradesh State Electricity Board (UPSEB) under the UP Electricity Reforms Act, 1999. UPPCL Bonds Series III & IV 2016-17 has been assigned a rating of AA(CE)(Credit enhancement) while UPPCL Bonds Series I & II 2017-18 has been assigned a rating of AA-(CE) by Brickwork Rating.

Axis Bank Limited (ABL) was incorporated in December 1993. It was known as UTI Bank till 2007. Its major promoters are Life Insurance Corporation of India (LIC), Specified Undertaking of the Unit Trust of India (SUUTI), General Insurance Corporation of India, The New India Assurance Company Limited, National Insurance Company Limited, The Oriental Insurance Company Limited, and United India Insurance Company Limited.

IREDA is the GoI’s only nodal agency to incentivise the renewable energy sector and attract investments by way of subsidies and lower cost borrowings. It is the sole programme administrator of the MNRE’s schemes, such as incentive schemes for wind and solar power projects, the roof-top solar power programme, a capital subsidy scheme for solar water heating systems and the National Clean Energy Fund.

IIFCL is a wholly owned Government of India company started in 2006 to provide long-term financial assistance to infrastructure projects through the Scheme for Financing Infrastructure Projects through a Special Purpose Vehicle called India Infrastructure Finance Company Ltd (IIFCL), broadly referred to as SIFTI. IIFCL has been registered as a NBFC-ND-IFC with RBI These broadly eligible sector for financing include transportation, energy, water, sanitation, communication, social and commercial infrastructure.

Housing and Urban Development Corporation Ltd. (HUDCO), incorporated in 1970, is a listed Miniratna public sector enterprise under the Ministry of Housing and Urban Affairs, Government of India (GoI). It is a public financial institution registered as a housing finance company (HFC) with NHB, and primarily finances social housing and UI projects. The GoI held a share of 89.81% in HUDCO, as of December 31, 2019, while the balance was held by the public.

HPCL was incorporated in 1974 after the takeover and merger of erstwhile Esso Standard and Lube India Limited by the Esso (Acquisition of Undertakings in India) Act 1974. Caltex Oil Refining (India) Ltd. (CORIL) was taken over by the Government of India in 1976 and merged with HPCL in 1978 by the CORIL-HPCL Amalgamation Order, 1978. Kosan Gas Company was merged with HPCL in 1979.

In Feb 2020, Indiabulls Housing Finance Ltd has been downgraded to AA from AA+ by both ICRA and CRISIL. The downgrade has been caused by continued challenges faced by IBHFL in mobilizing long-term resources and the weakening of its market position as a leading financier to the housing sector.

Sundaram Finance Ltd (SFL) is an RBI registered, deposit taking, NBFC, and is classified as an asset financing company. with a focus on commercial vehicle and car financing. The company also has diversified into Mutual Funds, Housing Finance, General Insurance, IT, Business Process Outsourcing, and Retail Distribution of financial services and products through subsidiaries, JVs, and associates.

PNB Housing Finance Limited is promoted by Punjab National Bank and is a registered Housing Finance Company with National Housing Bank (NHB). The Company got listed on the Indian stock exchanges on 7th November 2016. The Company’s asset base comprises retail loans and corporate loans. The retail business focusses on organized mass housing segment financing for acquisition or construction of houses.

LIC Housing Finance was established by LIC and other financial institutions in 1989. It is India’s second-largest housing finance company, with 9 regional offices, 24 back offices, and 282 marketing units in India, and 2 overseas representative offices with 2392 employees as of FY20. LIC Housing Finance Rating – CRISIL long term rating of AAA(Stable), CRISIL/ICRA/ short-term rating of A1+

Punjab and Sind Bank (P&S Bank) is a PSU bank that was founded in 1908. As of 30th June 2020, the Government of India has a holding of 80.28% in this bank’s share capital. The bank has a well-established network of 1,526 branches and 1,047 ATMs. Proposed talk to sale stake by GoI- Union Government of India has started talks to sell its stake from Punjab and Sind Bank to generate revenue so as to compensate revenue shortfall caused by the corona pandemic. This might put its BASEL III-tier I bonds under risk.

Long term rating has been downgraded for Basel III tier 2 to A with negative outlook and Basel III AT1 perpetual bonds to A- with a negative outlook India Ratings.

Larsen & Toubro Ltd (L&T) is a major technology, engineering, construction, manufacturing, and financial services conglomerate, with global operations. The presence of L&T is in key sectors like- Hydrocarbon, Infrastructure, Power, Process Industries, and Defence – for customers in over 30 countries around the world. As of Q1Fy21, India contributed most to the top-line followed by US, Europe & Middle East. Orderbook as of Q1Fy21 stood at Rs. 3051 billion mainly pending orders that belonged to the Infrastructure and Hydrocarbon sectors. On the international order book front, the Middle East pending orders contribute 14% of the total order book.

HDFC Life Insurance (HLI) is a joint venture between HDFC Ltd and Standard Life Aberdeen, a global investment company. HDFC Pension Management Co and HDFC International Life & Re are wholly-owned subsidiaries. HDFC Life is a life insurance solutions provider in India, operating in protection, pension, savings, health solutions, investment, and annuity.

ICICI Bank was incorporated by erstwhile ICICI Ltd in 1994. In 2002, ICICI Ltd was merged with ICICI Bank. In August 2010, ICICI Bank acquired Bank of Rajasthan (BoR) which increased its presence in northern and western India. As on June 30, 2020, the bank had a network of 5324 branches and 15,661 ATMs which signifies its strong geographical presence.

SBI Financial Performance during Q1FY21 • Net interest income (NII) increased by 16.14% year-on-year to in Q1FY21 • The net interest margin stood at 3.24% in Q1FY21 compared to 2.94% in the quarter ended March 31, 2020 (Q4-2020) and 3.01% in Q1-2020 • Provisions declined by 19% year-on-year to Rs 94.20 billion, Total COVID provision of Rs 30 billion as on Q1FY21. • The profit after tax grew by 81% year-on-year as exceptional gain of Rs 15.39 billion by selling stake in SBI Life Insurance Company. • From about 23% of total loans being under moratorium at FY20, came down to 9.5% in Q1FY21. • Net NPA ratio at 1.86% is down 121 bps y-o-y and Gross NPA ratio at 5.44% is down 209 bps y-o-y. SBI expects Rs 100-110 billio from accounts under resolution in next 2 quarters. • Capital Adequacy Ratio (CAR) has improved by 51 bps y-o-y to 13.40% as on Q1FY21.

Mahindra and Mahindra Limited, India’s largest tractor and utility vehicle manufacturer, holds a 51.19% stake in MMFSL and provides operational and financial support to this company. This enables MMFSL to mobilize funds at a good rate and to manage economic downturns. Comfortable capital position: MMFSL is well-capitalized with a capital adequacy of 19.6% as of 30 June 2020, which is above the RBI’s minimum stipulated requirement of 15% with Tier I ratio of 15.3%. Moreover, M&M Ltd infuses both equity and debt in MMFSL. The debt to equity stood at 5.41 times as on 30 June 2020 as compared to 5.23 times as of 31 March 2020 and 5 times as of 30th June 2019.

During FY20, HDFC net profit grew significantly by 84% y-o-y to Rs 177 billion from FY19. Net Interest Income also rose by 12.63% to Rs 129 billion during FY20. On asset quality, gross NPA stood at 1.99% as of March 31, 2020, as compared to 1.18% as of March 31, 2019. Net Interest Margin remained stable at 3.4% during FY20 as compared to 3.3% in previous fiscal. Housing and Development Finance Corporation– HDFC Ltd, a housing finance company, was formed in 1977 by International Finance Corporation(IFC), Washington, and the Aga Khan Trust. As on March 31, 2020, HDFC’s gross loans, stood at Rs. 5,167.73 bn. The company’s market capitalization is at Rs 2,828 billion as of 31st March 2020. Its total employee count was at 3095 as of 31st March 2020.

Export–Import Bank of India (EXIM) was established in 1982 under Export-Import Bank of India Act 1981. It is wholly owned (100%) by Government of India. EXIM provides financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the work of institutions engaged in financing the export and import of goods and services in order to promote the country’s international trade.

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an ‘in principle’ approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of RBI’s liberalization of the Indian Banking Industry in 1994. The bank was founded in August 1994 in the name of ‘HDFC Bank Limited’. HDFC Bank is promoted by HDFC Ltd. Currently, HDFC Bank Ltd. (HBL) is the largest private sector bank in India. As on March 31, 2020, the bank’s total asset stood at Rs.15305.11 billion. As of March 31, 2020, the Bank’s distribution network was at 5,416 banking outlets and 14,901 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 2,803 cities.

The Jawaharlal Nehru Port Trust (JNPT) was established in 1989 occupies a prominent place among the most modern ports in India and is ranked 28th among the top 100 container Ports in the world. The Jawaharlal Nehru Port Trust (JNPT) at Navi Mumbai (formerly known as the Nhava Sheva Port) is the largest container port in India and has been a key enabler for EXIM trade growth in India. JNPT handled over 5 Mn TEUs in FY 2018-19, which is share of ~52% of the total containerized cargo handled by all major ports in the country. Initially, JN Port was planned to be a ‘satellite port’ to the Mumbai Port with a purpose to decongest traffic.

National Bank for Agricultural and Rural Development (NABARD) was set up in 1982 through the NABARD Act, 1981, as an apex financial institution for the development and flow of credit to agriculture, small scale industries, cottage and village industries, rural sector, handicrafts and other rural crafts. NABARD also has a mandate to promote the integrated and sustainable development of rural areas. It also frames policies and guidelines for rural financial institutions and provides financial assistance to various issuing financial institutions and banks through refinancing. NABARD also monitors the flow of ground-level rural credit. NABARD is wholly owned by the GoI, with effect from March 31, 2018.

National Highway Authority of India (NHAI) was constituted under Section 3(1) of the National Highways Authority of India Act, 1988 and commenced operations in February 1995 to develop, maintain and manage national highways in the country. NHAI is vested with executive powers for developing national highways in India by the Ministry of Road Transport & Highways (MoRTH). NHAI is mandated to implement NHDP and Bharatmala, and is responsible for implementing other national highway projects, mainly those ensuring connectivity with major ports.

Indian Railway Finance Corporation (IRFC) was set up in 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets. IRFC is under the administrative control of the Ministry of Railways. Company is registered as Systemically Important Non–Deposit taking Non-Banking Financial Company (NBFC – ND-SI) and Infrastructure Finance Company (NBFC- IFC) with Reserve Bank of India (RBI).

India Bulls Housing Finance (IBHF) has seen its equity valuations drop and credit spreads on its bonds rise post the IL&FS default in September 2018.

South Indian Bank- SIB, set up in 1929, is a private sector bank. The bank is headquartered in Thrissur (Kerala) and had a network of 857 branches and 1407 automated teller machines as of December 2018.

IBCF is a non-deposit taking NBFC registered with the RBI and a 100% subsidiary of Indiabulls Ventures Limited, a listed Indian company.

Mahindra & Mahindra Financial Services Limited (“MMFSL”) is a subsidiary of Mahindra and Mahindra Limited, India’s largest tractor and utility vehicle manufacturer

Jindal Steel & Power recently got its credit rating upgrade from major credit rating agencies Crisil, ICRA and Care.

Road construction sector is one infrastructure play in credits that offers strong visibility in Revenue and Earnings growth in India.

Fortish Healthcare is seeing a lot of bidding interest but even if the company passes on to strong hands, bondholders and lender of promoter holding companies are not going to see any benefits, The lenders against pledged shares of Fortis Healthcare have invoked the pledge and currently own a large stake in the company.

Immediately there is unlikely to be any rating action on Shriram Transport bonds as SVL repayment is due next year and the group has clarified that they will honour all commitments through their own resources.

IDBI Bank credit rating, which is just barely at investment grade, will not change on LIC takeover.

Future Consumer (FCL), within just five years, has made its mark in thebranded FMCG market.

DLF debt outstanding reduced significantly after the promoters infused funds in DLF, post sale of their 40% stake in DLF Cyber City Developers Limited (DCCDL).

DHFL is facing the markets risk aversion on credits due to its high leverage of over 10x.

The bond of the issuer is protected from many different fronts, inherent operating business of the issuer and four types of guarantees, two of which are pledged shares of listed entities.

Yes Bank has outstanding market debt which is widely held across investor segments, and the debt has come under a cloud.

JSW Steel Ltd, a part of the O.P. Jindal Group, manufactures iron and steel products.

Recovery in Domestic Commercial Vehicle and Passenger Vehicle Sales

Asirvad Micro Finance Limited (AMFL) is a Chennai based RBI registered Non-Banking Finance Company-Microfinance. Incorporated in August 2007, the company is primarily engaged in microfinance