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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 285.00 | ACUITE A- | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 20.00 | ACUITE A- | Stable | Reaffirmed | - |
| Total Outstanding | 305.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long term rating of ‘ACUITE A-’ (read as ACUITE A minus) to the Rs 285.00 Cr. bank facilities of Manba Finance Limited. The outlook is 'Stable'.
Acuité has reaffirmed the long term rating of ‘ACUITE A-’ (read as ACUITE A minus) to the Rs 20.00 Cr. proposed non-convertible debentures of Manba Finance Limited. The outlook is 'Stable'. Rationale for the rating: The rating reaffirmation factors in company’s improving profitability metrics, improved scale of operations and moderate; albeit improving asset quality. The company reported a PAT of Rs 31.18 Cr. in FY2024 as against Rs. 15.21 Cr. in FY2023(Rs. 16.8 Cr. in H1FY25) . The improvement in company’s Net interest income was reflected in company’s ROAA which stood at 3.54 percent in FY2024 as against 2.25 percent in FY2023, company’s NIM improved from 12.90 percent in FY2023 to 13.84 in FY2024. Acuite observes that the company's listing on BSE and NSE on September 30, 2024, has strengthened its capital structure with net worth, increasing from Rs 200.61 crore in FY24 to Rs. 353 crore in the first half of FY25 and it's gearing levels improved from 3.75 times in FY24 to 2.49 times in H1FY25. Acuité takes note of the improved scale of operations, with the company disbursing ~Rs. 632.86 Cr. as on FY24, resulting into growth in the loan portfolio. The AUM stood at ~Rs 936.85 Cr. as on March 31, 2024 as compared to Rs 633.68 Cr. as on March 31, 2023. The asset quality of the company continues to remain moderate; albeit improving marked with GNPA of 3.07 percent in H1FY25 against 3.37 percent in FY2024. The rating continues to factor in MFL’s experienced management and operational track record. The rating is further supported by comfortable capitalization levels marked by 37.15 percent in H1FY25 (24.56 percent as on March 31, 2024). Going forward, the company’s ability to raise capital (both equity & debt), maintain capitalization & liquidity buffers, improve portfolio while containing delinquencies across different time buckets and its resultant impact on profitability metrics would remain key monitorable. |
| About the company |
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Incorporated in 1996, Mumbai based Manba Finance Limited (MFL) is a RBI registered Non Deposit taking Non-Banking Finance Company (ND-NBFC), founded by Mr. Manish K Shah. The company is engaged in Two-Wheeler Financing, Used Two-Wheeler Financing and Used Car Financing. The company has also forayed into Personal Loans and Inventory Funding for 2- wheeler dealers. MFL has presence in 5 states namely Maharashtra, Gujarat, Chhattisgarh, Rajasthan & Madhya Pradesh with a network of 65 Branches as on September 30, 2024.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone financial and business risk profile of MFL to arrive at the rating.
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| Key Rating Drivers |
| Strength |
| Experienced Promoter and Established presence in Two Wheeler Financing
MFL has an established presence of over two decades in two-wheeler financing. MFL was founded and promoted by Mr. Manish Shah, having vast experience in the field of two- wheeler financing. Entire shareholding of the company is held by the promoter and promoter group entities. The company commenced its operations in Mumbai and has expanded its operations to other parts of Maharashtra, Gujarat, Rajasthan, Chhattisgarh and Madhya Pradesh with a network of 65 branches as on March 31,2024. Over the years, the company has built relations with over 850 dealers MFL’s Assets under Management (AUM) stood at Rs 1,106.8 Cr. as on September 30, 2024. Acuité believes that MFL’s business profile will continue to benefit from the established presence in the area of operations backed by promoter experience. Improving Earning Profile The company reported a PAT of Rs 31.18 Cr. in FY2024 as against Rs.15.21 Cr. in FY2023 and continued to report growth in PAT which stood at Rs 16.8 Cr. in H1FY2025. The improvement in company’s Net interest income was reflected in company’s ROAA which stood at 3.54 percent in FY2024 as against 2.25 percent in FY2023, company’s NIM improved to 13.84 percent in FY2024 from12.90 in FY2023. The company’s ability to maintain its profitability will be key monitorable. |
| Weakness |
| Moderate Asset Quality albeit improving
The company reported 90+DPD at 3.07 percent as on September 30,2024 as against 3.37 percent as on March 31, 2024. The company also reported higher delinquencies in the softer buckets (30-90 DPD). The NNPA stood at at 2.40 percent as on September 30, 2024, the PCR stood at 22 percent for the same period. Any further slippages shall require higher provisioning thereby impacting the profitability. While the company’s current collections have been improving since FY23 on account of sale of repossessed vehicles, the same is expected to remain uncertain in the near term owing to the pandemic. Acuité believes, given the challenges, the company’s ability to manage the additional slippages while maintaining the portfolio collections will be crucial. Geographical concentration MFL is a Mumbai based NBFC having operations spread across five states namely, Maharashtra, Gujarat, Rajasthan, Chhattisgarh and Madhya Pradesh with network of 65 branches as on September 30, 2024. While the company expanded its presence to newer geographies like Gujarat, Rajasthan, Chhattisgarh and Madhya Pradesh its geographical exposure is concentrated in the Maharashtra and Gujarat contributing 95 percent of the gross loans in FY24. This exposes the company to geographical concentration risk. Thus, the company's performance is expected to remain exposed to competitive landscape in these regions and occurrence of events such as natural calamities, 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 credit profile of MFL. Acuité believes that geographic concentration in its portfolio will continue to weigh on the company’s credit profile over the near to medium term. |
| ESG Factors Relevant for Rating |
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MFL belongs to the NBFC sector which continues to complement the efforts of banks in enhancing small ticket retail lending in India. Some of the material governance issues for the financial services sector are policies and practices with regard to business ethics, board diversity and independence, compensation structure for board and KMPs, role of the audit committee and shareholders’ rights. On the social aspect, some of the critical issues for the sector are the contributions to financial inclusion and community development, responsible financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. The entity has made adequate disclosures regarding its policies on related party transactions, vigil mechanism and whistle blowing. The board of directors consist of 2 independent directors out of a total of 6 directors. Audit Committee consists of 3 directors with majority of them being Independent Directors.
MFL does have one woman director on its board. In accordance with the guidelines issued by RBI, the entity has reinforced a Risk Management and mitigation mechanism that is responsible for identification, evaluation and mitigation of operational and strategic risks. MFL aims to enable people to fulfil their ambition of owning their own vehicle. MFL have made a mark by being completely ethical and transparent in all dealings and ensuring that customers are satisfied by services at all times. MFL supports community development through CSR projects mainly aimed at promotion of education, eradication of hunger, environmental sustainability, gender equality and rural development projects among other causes. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
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MFL’s overall liquidity profile remains adequate with no negative cumulative mis-matches in near to medium term as per ALM dated Mar 31,2024. The company has cash and cash equivalents of Rs. 206.3 Cr. as on Sept 30, 2024.
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| 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 • Banks And Financial Institutions: https://www.acuite.in/view-rating-criteria-45.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Explicit Credit Enhancements: https://www.acuite.in/view-rating-criteria-49.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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