|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 25.00 | ACUITE BB+ | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 7.50 | ACUITE BB+ | Stable | Reaffirmed | - |
| Total Outstanding | 32.50 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuité has reaffirmed its long-term rating to ‘ACUITE BB+’ (read as ACUITE double B plus) on the Rs 25.00 Cr. bank facilities (including the proposed facilities) of Seeds Fincap Private Limited (SFPL). The outlook is 'Stable'. Acuité has reaffirmed the long-term rating to ‘ACUITE BB+’ (read as ACUITE double B plus) on the Rs 7.50 Cr. Non Convertible Debentures of Seeds Fincap Private Limited (SFPL). The outlook is 'Stable'. Rationale for rating The rating continues to factor in the company’s experienced management team, sound asset quality, and healthy growth in AUM levels in FY24. The company’s AUM grew to Rs. 328.50 Cr. as on March 31, 2024 and saw a further increase to Rs 356.39 Cr. for Q2FY2025, compared to Rs. 208.15 Cr. as on March 31, 2023. It has increased due to the healthy disbursement levels at Rs 294.73 Crore in FY2024 compared to Rs 213.27 Crore in FY2023. The rating further factors the comfortable asset quality indicators - marked by on-time portfolio of 98.75% percent as on March 31,2024. Reportedly, the company's GNPA is 0.35 percent and NNPA is nil as on March 31,2024. The rating additionally factors in the equity infusion of Rs 40 Cr. in June 2024 by existing and new investors. The rating, however, continues to remain constrained by SFPL’s weak earnings profile and its nascent stage of operation. The company's profitability remained restrained with losses of Rs (3.63) Crore for FY24 and Rs (3.97) Crore in FY23. These losses are on account of the high operating expenses pertaining to increase in branch networks. The rating also factors SFPL’s geographically concentrated portfolio due to its limited track record of operations. (Uttar Pradesh contributing 52% of total AUM as on September 30, 2024). Acuite believes that the company’s ability to timely infuse capital, improved networth base, and improvement in the profitability metrics, while keeping the momentum in growth of AUM, and disbursements would be a key rating monitorable. |
| About the Company |
| Incorporated in 2019, Seeds Fincap Private Limited (SFPL) is a RBI registered non- deposit taking NBFC with its headquarters in Gurugram (Delhi). The company is currently Promoted by Mr. Subhash Chandra Acharya as the CEO and Managing Director, and Mr. Avishek Sarkar as a whole-time Director. They are engaged in providing unsecured loans to people/enterprises living in Tier II, III & IV Cities. It commenced its operations in February 2021, and currently operating in Haryana, Rajasthan, Uttar Pradesh, Bihar, and Uttarakhand with 90 branches as recorded on March 31,2024 and 118 branches as on September 2024. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profile of Seeds Fincap Private Limited to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Experienced Management : SFPL is engaged in extending unsecured loans to people and enterprises in Tier II, III and IV cities. It operates in eight states with branch networks of 118 branches. The company is headed by Mr Subhash Chandra Acharya as the Managing Director-CEO and Mr Avishek Sarkar as the Whole Time Director are supported by the seasoned professionals for the daily operations. The management has an extensive experience of over a decade in the industry. Acuité believes that company’s growth prospects will be supported by the promoter’s experience in this industry. Healthy AUM growth while maintaining Asset Quality; The company’s loan portfolio significantly registered a growth Rs. 328.50 Cr. on March 31, 2024, compared to Rs. 208.15 Cr. as on March 31, 2023. The company extends loans to entrepreneurs, with ticket sizes ranging between Rs 50,000 to 10,00,000. The average tenure of these loans range between 19 to 36 months. SFPL has demonstrated sound asset quality marked by on- time portfolio of~ 99 percent as on March 31,2024. For Q2FY25, the company had an AUM of Rs 356.39 Cr. Acuité believes that SFPL’s ability sustain the growth in its loan book, while maintaining sound asset quality level in the near to the medium term will be key rating monitorable. |
| Weakness |
| Subdued profitability metrics: SFPL was incorporated in 2019, and it is operating from Delhi since February 2021. The company is spread across 8 states, with the major exposure in state of Uttar Pradesh (54% of the portfolio o/s). The company expanded their branch network from 54 in March 31, 2023, to 90 in March 31, 2024, to 118 in September 2024 as to improve it's borrower base. This expansion resulted in high operating expenses primarily driven by staff expenses leading to subdued profitability metrics. The company reported losses to the tune of Rs 3.63 Cr. in FY24 against the losses of Rs 3.97 Cr. in FY23. SFPL’s ability to scale up its operations while maintaining its profitability metrics would be a key rating monitorable. Modest capital structure: SFPL offers loans for Trading, Agriculture & Dairy, Manufacturing & Production, Services and Consumer loan & MFIs which account for approximately 54%, 11%, 9%, 5% , 20% respectively of the portfolio. The company’s capital structure is marked by Networth of Rs 64.69 Cr. as on March 31, 2024 and total debt of Rs Cr. 302.08 resulting in debt/equity ratio of 4.67 times. There has been capital infusion of Rs 32 Cr. during FY2024 and another infusion of Rs 40 Cr. in Q1 FY2025 resulting in a networth of Rs 104.78 Cr. for Q1FY2025 from Rs 64.69 Cr. in FY 2024. |
| Rating Sensitivity |
|
| Liquidity Position |
| Adequate |
| As per ALM statement as on March 31, 2024, SFPL has no negative cumulative mismatches in any buckets upto 1 years. SFPL’s is able to maintain its monthly collection efficiency at the range of ~97 percent. SFPl’s maintained cash and bank balances of Rs.79.24 Cr. Acuité believes that the SFPL’s has adequate liquidity to meet its debt obligation in near to medium term. |
| Outlook: Stable |
| |
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
|
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm |
| Note on complexity levels of the rated instrument |
|
| |
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Contacts |
About Acuité Ratings & Research |
