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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 109.06 | ACUITE BB+ | Stable | Reaffirmed | Negative to Stable | - |
| Total Outstanding | 109.06 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE BB+’ (read as ACUITE double B plus)on the Rs.109.06 Cr. bank loan facilities of Khush Housing Finance Private Limited (KHFPL). The outlook has been revised from 'Negative' to 'Stable'
Rationale for rating. Acuite, vide press release dated December 26, 2024, downgraded the rating of KHF with a negative outlook. In response, the client has appealed and provided additional information and clarifications, particularly regarding capital adequacy, gearing ratio, earnings profile, as well as projections and the strategic vision for FY25. Notably, there has been a marginal improvement in the company's Capital Adequacy Ratio (CAR), primarily driven by healthy profit accretion. Furthermore, the company has made significant progress in reducing its gearing ratio.
However, the revision in outlook is on account of improvement in the Capital Adequacy Ratio and Gearing ratio. The rating takes into account sequential deterioration in KHFPL’s scale of operations as reflected in the sharp decline in AUM on account of negligible disbursements. Accordingly, the company’s AUM deteriorated at Rs. 170.80 crore as on March 31, 2024 as against 218.07 crore as on March 31, 2023. Further, the asset quality remains under pressure marked by on-time portfolio at 69.53% as on March 31, 2024 as against 72.05 percent as on March 31, 2023. The rating continues to factor in the company’s moderate scale of operations, geographical concentration in Maharashtra(~84 percent of the total portfolio as on March 31, 2024) and moderate profitability. Nevertheless, the rating derives comfort from the company’s adequate capitalization metrics marked by networth of Rs. 154.80 Cr. and CAR which stood at 124.27 percent as on March 31, 2024. The gearing levels of KHFPL has improved and remains low mainly on account of prepayment of existing debt obligations The gearing of the company stood at 0.27 times as on March 31, 2024 as against 0.68 times as on March 31, 2023. Acuité believes that the ability of the company to raise fresh debt and achieve steady and sustainable growth in AUM while maintaining profitability & asset quality and comfortable liquidity profile will be key monitorable. |
| About the company |
| Incorporated in 2011, Khush Housing Finance Private Limited (KHFPL) is a Mumbai based housing finance company registered with National Housing Bank (NHB) under National Housing Bank Act, 1987. The company commenced business in 2015 and is engaged in providing home loans and loans against property to salaried and non-salaried individuals, mainly mid/low-income customer segment and economically weaker section of the society which fall under credit linked subsidy scheme (CLSS). The company has a presence in three states, namely Maharashtra, Gujarat and Rajasthan through a network of 17 branches spread across 14 districts as on March 31,2024. Its Asset Under Management (AUM) stood at Rs. 170.80 Cr. as on March 31, 2024. |
| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Acuité has adopted a standalone approach on KHFPL’s business and financial risk profile for arriving at the rating. |
| Key Rating Drivers |
| Strength |
| Experienced Management. KHFPL is promoted by Mr. Amit Magia, who also looks after the operations of the company as Managing Director and Chief Executive Officer (MD & CEO). Mr. Amit Magia together with family members and trusts holds entire stake in the company. Mr. Magia has more than 25 years of experience in the field of Finance, Banking, Treasury Management, Real Estate Investments, and Liaising with Regulatory bodies. The company also benefits from the experience of eminent professionals on its board namely Mr. Prakash Mallya, a career banker having over 45 years of experience in various capacities in Canara Bank, Syndicate Bank, among others and Mr. Geoffrey Ross Bazzan,a senior financial markets executive with over 20 years of experience in managing portfolios and analysing companies across the Asia Pacific ex-Japan region. Further, Mr. Magia is assisted by seasoned and experienced professionals in managing the operations of the company. Acuité believes that extensive experience of the promoter will be central to support the business profile of KHFPL in the near to medium term. Comfortable capitalisation & gearing levels. KHFPL had healthy capitalization levels as on March 31, 2024 as reflected in Capital Adequacy Ratio (CAR) of 124.27 percent (Tier I: 123.02 percent) as on March 31, 2024. The same stood at 96.93 percent (Tier I: 96.93 percent) as on March 31, 2023 led by healthy accretion of profits. The gearing of the company has seen a significant improvement in its gearing from its peak gearing levels 1.92 times as on March 31, 2021. The gearing of the company improved to 0.27 times as on March 31, 2024 as against 0.68 times as on March 31, 2023 led by increased accretion of profits to reserves coupled with prepayment of its existing debt. |
| Weakness |
| Sequential deterioration in scale of operations; Geographical concentration risk. The company’s disbursements have seen a continuous deterioration over the past few years leading to decline in its AUM and earning profile. The management has been conscious with its disbursements in order to curtail any asset quality pressures. KHFPL’s AUM has also moderated subsequently. The AUM of the company stood at Rs. 170.80 crore as on March 31, 2024 as against Rs.218.07 crore as on March 31, 2023. The earning profile remains muted marked by reduction in Net interest income from Rs. 13.02 Cr. as on March 31, 2024, to Rs. 21.14 Cr. as on March 31, 2023. The Profit after tax however sawa marginal decline and stood at Rs. 4.58 crore for FY24 and Rs. 6.94 crore for FY23. The company faces high geographical concentration risk on account of its majority of loan exposure in Western India region. Around 83.96 percent of the outstanding portfolio as on March 31, 2024, is concentrated in Maharashtra region, followed by Rajasthan at 12.70 percent and Gujarat contributing to a small portion of 3.36 percent. Moderate Asset Quality. KHFPL primarily focuses on home loans , catering to economically weaker section and low-income group individuals which are highly vulnerable to exogenous shocks. The asset quality of the company remains under pressure marked by on-time portfolio at 69.53 percent as on March 31, 2024 as against 72.05 percent as on March 31, 2023. As on March 31, 2024, KHFPL reported Gross NPA of 3.09 percent (PY: 2.68 percent) and Net NPA of 0.001 percent (PY: 0.47 percent). Acuité believes that the company’s ability to achieve steady and sustainable growth in AUM while maintaining asset quality will be key monitorable. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| KHFPL’s overall liquidity profile remains adequate with no negative cumulative mismatches in near to medium term as per ALM dated March 31, 2024.Company’s cash and cash equivalents stood at Rs.3.41 Cr. as on March 31, 2024. KHFPL reported an overall collection efficiency of ~98 percent in March 2024. Acuité believes that the ability to raise long term funding along with stability in collection efficiency will be critical to maintaining a stable liquidity profile. |
| 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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• 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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