Established track record of Promoters

Mr. Deepak Baid, Managing Director and Promoter of LIFPL, has over two decades of experience in the financial services industry and has played a vital role in building the company's current scale and presence in Rajasthan. The Board of Directors comprises Mr. Deepak Baid (Managing Director), Mrs. Prem Devi Baid (Director), Mrs. Anisha Baid (Director), Anil Balkishan Patwardhan (Independent Director), Mr. Surendra Mehta (Independent Director) and Mr. Kishore Kumar Sansi (Independent Director). They have over decades of experience in the financial services industry. The company has onboarded Mr. Yaduvendra Mathur (Independent Director),to further strengthen the board. Over the years, LIFPL has successfully expanded its operations to 115 branches- across Rajasthan, Gujarat and Madhya Pradesh. The company’s AUM has grown to Rs. 531.60 crores as on March 31, 2022 as compared to 462.09 crore as on March 31, 2021. The AUM further grew to Rs. 593.22 Cr as on September 30, 2022.

Acuité believes that the company’s growth prospects will be supported by the promoters experience in the industry along with their demonstrated track record of resource raising ability.

Adequate financial risk profile with diversified funding mix

LIFPL’s networth stood at Rs. 131.76 Cr. as on September 30, 2022 and reported adequate capital adequacy ratio (CAR) of 22.84 percent comprising Tier 1 capital at 22.57 percent and Tier II capital at 0.27 percent. The company has a strong lender profile comprising Banks both private and PSU and Financial Institutions. LIFPL has demonstrated access to funding from both banks and large NBFC/FIs and has been able to obtain disbursements of ~Rs 222.50 crores for FY2022 in the form of Term loans and NCD/PCG. During H1FY23, the company was able to raise fresh debt of around Rs. 185 Cr in the form of term loans and NCDs.
LIFPL’s financial risk profile is further supported by its healthy earnings profile as reflected by PAT levels of Rs. 14.88 Cr in FY2022 as compared to Rs. 10.52 Cr in FY2021. However during H1FY23, the company incurred higher opex ~7.57 percent (annualized) on account of branch expansion. The company opened 22 new branches during H1FY23, expanding its branch network to 115 branches as on September 30, 2022 as compared to 93 branches as on March 31, 2022. This resulted into lower PAT levels of Rs. 4.45 Cr and RoAA of 1.53 percent (annualized) as on September 30, 2022.

Acuité believes, going forward, the ability of the company to mobilize low-cost funding through debt/ sub debt and its ability to deploy the funds profitably will be a key rating monitorable. Fructification of new branches resulting in improved earning profile would also be a key rating monitorable.
 

Susceptibility of asset quality to seasoning and concentration risk

LIFPL forayed in the lending segment in 2011, however had commenced extending Loan against Property since 2015 having an average tenure of upto 7 years. The company’s loan book has grown significantly to Rs. 531.60 Cr. as on March 31, 2022, from Rs. 462.09 Cr. as on March 31, 2021. The loan portfolio further grew to Rs. 593.22 Cr as on September 30, 2022. Further, the company’s operations are concentrated in Rajasthan with ~91 percent of the portfolio outstanding as on September 30, 2022. The company has started its operations in Gujarat and Madhya Pradesh and plans to increase its presence. Occurrence of events such as slowdown in economic activity or shifting of activity to other geographies could impact the cash flows of the borrowers, thereby impacting credit profile of LIFPL’s borrowers. While Acuite takes cognizance of asset quality challenges in the MSME sector, LIFPL has been able to maintain its on-time portfolio at 90.80 percent with a GNPA of 2.80 percent as on September 30,2022. The GNPA & NNPA levels stood at 2.84 percent & 1.89 percent as on March 31, 2022 respectively as against 3.32 percent & 2.97 percent as on March 31, 2021. The company’s ability to maintain its asset quality given the low seasoned loan book and increased presence in the newer geographies will remain a key rating monitorable.
Acuité  believes that any significant deterioration in asset quality will adversely impact the credit risk profile and will remain a key rating sensitivity factor.