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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
|---|---|---|---|
| Bank Loan Ratings | 30.00 | ACUITE A- | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 170.00 | ACUITE A- | Stable | Reaffirmed | - |
| Total Outstanding | 200.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
Rating Rationale |
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Acuité has reaffirmed the long term rating at ‘ACUITE A-’ (read as ACUITE A minus) to the Rs.30.00 Cr. bank facilities of Hindon Mercantile Limited (HML). The outlook is ‘Stable’.
Acuité has reaffirmed the long term rating at ‘ACUITE A-’ (read as ACUITE A minus) to the Rs.170.00 Cr. non-convertible debentures of Hindon Mercantile Limited (HML). The outlook is ‘Stable’. Rationale for Rating The rationale for rating reflects the sustained growth in AUM while maintaining its asset quality and being comfortable in its capitalization metrics. The disbursement levels have shown significant traction; accordingly, the consolidated AUM levels have increased from Rs. 675.80 Cr. as on Mar 31, 2024, to Rs.1041.15 Cr. as on FY25.The rating also considers comfortable capitalization levels and the capital infusion of Rs 81.47 Cr. in FY2024 and Rs.223.65 Cr. in 9MFY25 resulting in the improvement in Net worth from Rs 269.38 Cr. as on FY24 to Rs.702.22 Cr. as on FY25, the Capital Adequacy Ratio (CAR) of the company stood at 34.70 percent as on March 31, 2024 and 25.99 percent as on FY25.The rating continues to factor in rich experience of management in E- Vehicle financing, cumulatively the group has financed more than ~80,000 E-vehicle since 2016. The rating strengths are partially offset by moderate scale of operations and low seasoning of the loan portfolio. The company scaled up its portfolio mainly in last quarter of FY2022 indicating low seasoning. Also, the portfolio remained geographically concentrated in Uttar Pradesh, Bihar, Delhi, Maharashtra and other states having a collective exposure of over 50 percent as on FY25. Going forward, HML Group's ability to raise capital, demonstrate sustainable growth in its scale of operations while maintaining asset quality and profitability metrics will remain a key monitorable. |
About the Company |
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Hindon Mercantile Limited (HML) is a Non-Banking Financial Company Non-Deposit Taking (NBFC-ND) entity registered with the Reserve Bank of India. The Company was incorporated on 14th August 1985 and the company was then acquired by the promoter Mr. Kapil Garg in 2019. The company is engaged in the businesses of providing secured loans such as wholesale lending, Mediclaim Premium Financing, secured MSME, business loans, Unsecured loans and other corporate loans. The present directors of the company Mr. Luv Khanna, Mr. Kapil Garg, Mr. Pradip Kumar Kar, Mr. Amol Sinha and Mr. Hemant Bhageria. The registered office of the company is in New Delhi.
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| About the Group |
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Hindon Mercantile Limited (HML) is a Non-Banking Financial Company Non-Deposit Taking (NBFC-ND) entity registered with the Reserve Bank of India. The Group has been extending loans towards EV vehicles, Solar Panels, Mediclaim Premium Financing, MSME loan, wholesale financing and other corporate loans. The present directors of the company are Mr. Luv Khanna, Mr. Kapil Garg, Mr. Pradip Kumar Kar, Mr. Amol Sinha and Mr. Hemant Bhageria. HML is the parent company of Mufin Green Finance Limited where the parent company owns 54.31% of the subsidiary as on March 2025. The registered office of the company is in New Delhi.
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Unsupported Rating |
| Not Applicable |
Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has consolidated the business and financial risk profiles of Hindon Mercantile Limited (Parent Company) and its subsidiary Mufin Green Finance Limited. This consolidation is in the view of the common promoters and strong financial and operation synergies |
Key Rating Drivers |
| Strength |
| Support from Promoter and Investors
HML group is a Non-Banking Financial Company Non-Deposit Taking (NBFC-ND) registered with Reserve Bank of India. The Group has been extending loan towards EV vehicles, the Solar Panels, Mediclaim Premium Financing, MSME loan, wholesale financing and other corporate loans. The present directors of the company are Mr. Luv Khanna, Mr. Kapil Garg, Mr. Pradip Kumar Kar, Mr. Amol Sinha and Mr. Hemant Bhageria. HML is the parent company of Mufin Green Finance Limited where the parent company owns 54.31% of the subsidiary as on March 2025. The company has a comfortable capitalization marked by a net worth of Rs. 702.22 Cr. as on FY25. The company has raised capital of Rs. 221.54 Cr. in FY2025 from HNI, family funds and venture capital out of which Rs.27 Cr. raised as right issue from existing investors. Moderate Earnings Profile HML’s branch light, digital lending business model has enabled it to break-even at an early stage. During FY24, HML reported profit after tax (PAT) of Rs.18.51 Cr. (Rs.12.32 Cr. for FY23) on total income of Rs.70.03 crore (Rs.69.24 crore for FY23). This improvement in the earnings is primarily on account of significant growth in incremental disbursements made in FY2024 as well as in FY2025 which has led to the AUM growing from Rs.675.80 Cr. in FY24 to Rs. 1,041.15 Cr. in FY25. This enabled it to expand its geographical presence pan India as on March 31,2025. Profitability was partially offset by higher operating expenses (Rs.18.51 Cr. for FY2024 to Rs.19.78 Cr. for FY25) on the back of higher borrowing costs. Acuité believes that company’s ability to sustain improvement in earnings profile in the current operating environment coupled with the intense competition in the retail segment will be key rating monitorable |
| Weakness |
| Limited track record of operations coupled with limited seasoning of newly disbursed portfolio and geographical concentration:
HML commenced its lending operations with vehicle loans and gradually diversified its product offerings to infrastructure financing for E-vehicles. HML caters to over 47,287 customers across 20 states via OEM and dealer network in India. The AUM stood at ~Rs 675.80 Cr. as on Mar 2024 and has grown to Rs.1041.15 Cr. as on March 31,2025, of which Electric vehicle loans comprised ~76% followed by loans towards infrastructure for EVehicles at ~9%, Secured business & personal loan at ~15% and Solar Panel loans at ~1%. Though these loans are offered for short tenor ranging 18-24 months, disbursements of these loans were made largely in the FY2023 and FY2024 indicating limited seasoning of the newly disbursed AUM. As on March 31, 2025, the company’s AUM is majorly concentrated in Uttar Pradesh, Delhi, Bihar and rest of AUM is covered in remaining states, namely, Haryana, Telangana and Karnataka. Thus, the company's performance is expected to remain exposed to the competitive landscape in these regions, which may adversely impact the credit profile of the borrowers. Besides geography, the company will be exposed to competition and any changes in the regulatory framework, thereby impacting the credit profile of HML and MGFL. Acuité believes that the ability of the company to maintain sustainable growth of portfolio while managing its asset quality through business cycles will be key monitorable. |
| ESG Factors Relevant for Rating |
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HML Group belongs to the Non-Banking Financial Companies (NBFC) sector which complements bank lending in India. Adoption and upkeep of strong business ethics is a sensitive material issue for the financial services business linked to capital markets to avoid fraud, insider trading and other anti-competitive behaviour. Other important governance issues relevant for the industry include management and board compensation, board independence as well as diversity, shareholder rights and role of audit committee. As regards the social factors, product or service quality has high materiality so as to minimise misinformation about the products to the customers and reduce reputational risks. For the industry, retention, and development of skilled manpower along with equal opportunity for employees is crucial. While data security is highly relevant due to company’s access to confidential client information, social initiatives such as enhancing financial literacy and improving financial inclusion are fairly important for the financial services sector. The material of environmental factors is low for this industry.
The groups board comprises of a total of six directors out of which four are independent directors and two female directors. HML maintains adequate disclosures with respect to the various board level committees mainly audit committee, nomination and renumeration committee along with stakeholder management committee. MGFL also maintains adequate level of transparency with regards to business ethics issues like related party transactions, investors grievances, litigations, and regulatory penalties for the group, if relevant. In terms of its social impact, MGFL is actively engaged in community development programmes through its CSR committee. For better servicing of its customers, the entity has disseminated a step-by-step guide for loan appraisal, the document requirements and its services and charges. |
| Rating Sensitivity |
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| All Covenants |
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The Issuer will at all times maintain: - Capital Adequacy ratio of not less than 15%; - Ratio of total debt to total equity of not higher than 7x (whereas “total equity” shall include subordinated debt to the extent that such can be accounted for as Tier II capital in accordance with applicable regulations); - Starting [ ] only, an Uncovered Capital Ratio below 15% (defined as the PAR>90days + restructured portfolio minus loan loss provisions divided by total equity); - Open foreign exchange exposure of less than 5% of its liabilities and assets in non INR denominated currency |
Liquidity Position |
| Adequate |
| HML group liquidity profile as on 31st Mar,2025 is well matched with no negative cumulative mismatches across time buckets. The company reported cash and cash equivalents of Rs. 150.09 Cr. as on March 31, 2025. |
| Outlook - Stable |
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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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• Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm |
Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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