Avanse Financial Services Limited Credit Analysis

Avanse Financial Services Limited (AFSL), a systemically important Non-Deposit taking NBFC commenced its business operations in 2014. The company is operating in the business of providing education loans for the purpose of higher studies both in India and abroad and also to Education Institutions for their working capital and growth capital requirements. It has a presence across 17 locations with an employee base of 530.

 A controlling stake of 80% was acquired by the global private equity firm Warburg Pincus in 2019 while International Finance Corporation holds the remaining 20% stake.

Proposed stake dilution by Warburg Pincus- As per recent news, Warburg Pincus plans to sell

around 25% to 30% of its stake in AFSL to raise around Rs 19.50 billion to Rs 25 billion.

Parameters (Rs billion)	FY21	FY22	Q1FY23
Total Income	4.39	5.08	1.81
PAT	0.38	0.63	0.30
AUM	31.03	48.36
Leverage	2.50	3.60
CRAR (%)	32.74	22.96
GNPA (%)	1.72	1.29
NNPA (%)	0.43	0.53	0.53

Outstanding Debt of AFSL-

Year to Maturity	Amount Outstanding (Cr.)
2022	300
2023	1380
2024	825
2025	450
2027	50

 

AFSL traded bond levels-

Date	ISIN	Coupon (%)	Yield (%)	Maturity
15-Jun-22	INE087P08038	9.35	9.95	27-Dec-27
17-Jun-22	INE087P08038	9.35	10.10	27-Dec-27
20-Jun-22	INE087P08038	9.35	10.00	27-Dec-27
21-Jun-22	INE087P08038	9.35	9.88	27-Dec-27
12-Jul-22	INE087P08038	9.35	10.15	27-Dec-27
8-Aug-22	INE087P08038	9.35	9.87	27-Dec-27

Credit Positive-

⮚     Adequate Capitalization

⮚     Operating efficiency

⮚     Comfortable asset quality

Credit Negative-

⮚     Risky loan portfolio

⮚     Rising leverage