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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 155.00 | ACUITE BBB- | Stable | Downgraded | Negative to Stable | - |
| Total Outstanding | 155.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has downgraded the long-term rating from ‘ACUITE BBB’ (read as ACUITE triple B) to ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs. 155.00 Cr. bank facilities of Mentor Home Loans India Limited (MHIL). The outlook is revised from 'Negative' to 'Stable'. Rationale for the rating. The downgrade of rating is on account of sequential deterioration in MHIL’s scale of operations and in profitability metrics. The company’s on-book AUM deteriorated at Rs. 285.06 crore as on March 31, 2025 (provisional) as against Rs 338.97 crore as on March 31, 2024 and Rs 397.93 Cr. as on March 31 2023. The PAT stood at Rs 1.02 Cr. in FY2025 (provisional) as against Rs 0.39 Cr. in FY2024. The rating is further constrained due to the ongoing dispute amongst the promoters which has impacted the business growth & resources raising in the company over the last few years. Over the last few years, the company’s disbursals have declined from Rs. 95.27 Cr. during FY2024 to Rs. 67.44 Cr. during FY2025 (provisional) owing to challenges in resource raising from financial institutions. Consequently, there has been a decline in the overall AUM. The rating is further constrained by the relatively small scale of operations and geographical concentration of the loan portfolio with ~72 percent POS in Rajasthan. The rating continues to factor in MHIL’s experienced promoter and management team, as well as its adequate capitalisation & liquidity buffers. Overall Capital Adequacy Ratio (CAR) stood at 122.76 percent as on March 31, 2025 (provisional). The rating further derives strength from healthy asset quality marked by on time portfolio of 93.06 percent as on March 31, 2025(provisional). Acuité believes that an amicable resolution to the ongoing promoter dispute is a key rating monitorable for the company’s growth prospects going forward. |
| About the company |
| MHIL is a Jaipur based non-deposit taking Housing Finance Company (HFC) engaged in mortgage financing, Loans against Property (LAP) and housing loans. The company was originally established in 1995 as a Non-deposit taking Non-Banking Finance Company (NBFC) and subsequently in 2014, the company got registered as a Housing Finance Company with the National Housing Bank. The company is promoted by Mr. G. L. Goyal and is presently managed by Mr. Pawan Goyal (Managing Director), who has over two decades of experience in the financial services sector. The company has presence in Rajasthan, Madhya Pradesh, Maharashtra and Gujarat and operates through a network of 41 branches. |
| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of MHIL to arrive at this rating. |
| Key Rating Drivers |
| Strength |
| Moderate Asset Quality MHIL, initially started its operations in 1994 as an NBFC engaged in vehicle financing and subsequently shifted to housing finance in 2014. The company’s AUM stood at Rs. 285.06 Cr. as on March 31, 2025(provisional). However, MHIL’s AUM has remained stagnant over the past couple of year. The company’s operations are mostly concentrated around Rajasthan with around 76 percent of the loan book originated from Rajasthan. Besides Rajasthan, the company has presence in other states like Gujarat, Madhya Pradesh & Maharashtra. It operates through a network of 36 branches spread across these four states. While Rajasthan continues to be a major market for MHIL, its entry into other states will gradually de-risk its portfolio from geographical concentration risk. MHIL’s operations are overseen by Mr. Pawan Goyal, Managing Director,along with support from professionals in various verticals. MHIL has reported decline in loan portfolio while maintaining asset quality. The company reported Gross Non Performing Assets (GNPA) of 1.65 percent and NNPA of 1.26 percent as on March 31, 2025 (provisional). MHIL’s borrower profile constitutes exposure of ~60 percent to self-employed borrowers and remaining to salaried borrowers. The cash flows of these borrowers especially in the self- employed category are linked to the economic activities in the region. MHIL’s portfolio has however, declined as the company is raising funds only through direct assignment transactions as lenders have taken a cautious approach in sanctioning fresh loans with regards to on-going family feud. Acuite believes that MHIL’s ability to raise and deploy the funds profitably while maintaining its asset quality will be key rating monitrable. Adequate Capitalisation MHIL’s capitalization remained comfortable with overall Capital Adequacy Ratio (CAR) of 122.76 percent as on March 31, 2025 (provisional) as against 119.89 percent as on March 31, 2024. Of the overall CAR as on March 31, 2025 (provisional), Tier I CAR stood at 115.35 percent and Tier II CAR stood 7.41 percent. The improvement in CAR was majorly on account of reduction in risk weighted assets due to declining on-book loan portfolio. MHIL has a net worth of Rs. 149.64 Cr. as on March 31, 2025(provisional) and Rs. 148.62 Cr. as on March 31, 2024. The company had relied mainly on bank lines to support its business growth however, since FY2021, the company has relied on direct assignment transactions to sustain its AUM. The company reported gearing of 0.45 times as on March 31, 2025(provisional) from 0.64 times as on March 31, 2024. Debt comprises mostly term loans and cash credit availed from Banks & NBFC/FI. Acuité believes that the MHIL is adequately capitalized to support its growth prospects for over near to medium term. |
| Weakness |
| Disputes in the promoter family MHIL is a family run NBFC, promoted by Mr. G. L. Goyal. The day to day operations of the company were managed by his sons, Mr. Pawan Goyal and Mr. Basant Goyal. Post a family feud, Mr. Basant Goyal, (a member of the promoter family), who was earlier associated with MHIL as an Executive director, has stepped down from his executive role, though he still continues on the Board of the company. Mr. Pawan Goyal, is presently in charge of the day to day operations. The promoter dispute is currently sub judice and is being represented in National Company LawTribunal (NCLT). The management has inducted professionals from the industry to oversee key functions which were earlier handled by Mr. Basant Goyal. The ability of the new management to maintain the key operating parameters, post these operational level developments is to be examined. Acuité believes that the efficacy of the company to maintain its operating performance and financial flexibility under these circumstances will remain a key rating monitorable. Susceptibility of operating performance to the overall operating environment MHIL’s key product offerings are spread across financing through home loans in the affordable housing segment and Loan against property (LAP). Around 72 percent of MHIL’s portfolio as on March 31, 2025 accounts for home loans while remaining comprises of LAP portfolio. Majority of the MHIL’s borrowers comprise of self-employed individuals including small traders, retailers, businessmen and other local small business operators. MHIL’s overall credit profile is also susceptible to concentration of portfolio in Rajasthan, hence, the serviceability of these loans is directly dependent on the level of economic activity in the region. While on one hand, MHIL could face asset side challenges w.r.t asset quality, MHIL also faces challenges in raising fresh long-term funding. The overtly cautious and selective approach adopted by lenders and management dissent has led to lower availability of fresh funding for MHIL. The increasing challenges in the operating environment has further made it difficult to raise fresh long-term funding. Amidst such a challenging financing environment, companies like MHIL, with dissension in management, are likely to face challenges in terms of their funding. MHIL has, in this period, adopted to means like raising finances through sale of pool through direct assignment route. Further the thrust of regulator in the affordable housing segment, has led to various large number of players entering the affordable housing finance segment. These players offer similar products at competitive rates which has led to increased choice for customers. Acuite believes that the company will benefit from the expected buoyancy in demand for affordable housing segment once the economic climate in the country stabilises and MHIL’s ability to benefit from the growth in demand for affordable housing. MHIL’s disbursement for FY2025 (provisional) declined at Rs. 67.44 Cr. as compared to Rs.95.27 Cr. in FY24. Sustainability of growth of this segment remains a key monitorable. Acuité believes that MHIL‘s ability to raise long term funding at competitive rates to augment its growth in a challenging operating environment while maintaining its asset quality and keeping its opex at optimal levels will be a key rating monitorable. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| MHIL has a well-matched asset liability profile as per ALM statement dated March 31, 2025, and reports no cumulative negative mismatches. As on March 31, 2025 MHIL had cash & cash equivalents of Rs. 1.34 Cr. The company also avails cash credit facilities from Banks and has sold down its assets mainly through direct assignment transactions. As per the latest ALM statement dated March 31, 2025 the total inflows (via loans & advances) over the next 1 year (i.e. upto end-March 2026) is Rs. 20.27 Cr. and total outflow (via borrowings) over the next 1 year (i.e. upto end-March 2026) is Rs. 21.25 Cr. |
| Outlook: |
| Stable. |
| Other Factors affecting Rating |
| None. |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
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| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Any other information |
| None. |
| Applicable Criteria |
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• 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 |
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