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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 10.00 | ACUITE BB- | Stable | Reaffirmed | - |
| Total Outstanding | 10.00 | - | - |
| Total Withdrawn | 0.00 | - | - |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 minus) on the Rs.10.00 Cr. bank facilities of Metrocity Finance Private Limited. The outlook is ‘Stable’. Rationale for the rating The reaffirmation of the rating takes into consideration the experience of the management along with an established presence in the operating areas through other group companies. The strength is partially offset by modest scale of operations, geographic concentration, stretched liquidity, average collection efficiency and competition inherent to NBFC business. |
| About the company |
| Rajasthan-based, Metrocity Finance Private Limited (MFPL) was incorporated in 2015 by Mr. Vipul Setia (Managing Director). Mr. Setia has over a decade of experience in asset financing through family owned NBFCs like SK Finance Limited and Setia Auto Finance. The company is engaged in commercial vehicles financing and Loan against property (LAP), wherein the target borrower base is SMEs. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered the standalone business and financial risk profiles of MFPL to arrive at this rating. |
| Key Rating Drivers |
| Strength |
| Experienced Management and established presence in area of operation: MFPL, commenced its lending operations in 2015, offering hypothecation against commercial vehicle and loan against property to SME sector. The company deals in two product i.e LAP business and Hypothecation which stands at 15% and 85% respectively as on March 31, 2024. MFPL saw growth in AUM from Rs.25.12 Cr. as on Mar 31, 2023 to Rs.38.35 crore as on March 31, 2024. MFPL caters to rural areas of Rajasthan with presence across 7 districts. MFPL is promoted by Mr. Vipul Setia (Director) and Saroj Setia (Director). The promoters are engaged in NBFC business since 1994 through other group entities. The promoters are well supported by managing committee, who have almost two decades of experience working with various NBFCs. MFPL’s return on average assets (ROAA) as on March 31, 2024 stood at ~2.73 percent vis. a vis. ~2.97 percent as on March 31, 2023. Acuité believes that experience of the promoters and management will be central to support the business risk profile of the company. Modest AUM with improving asset quality. The company’s loan portfolio outstanding grew to Rs. 38.35 Cr. as on March 31, 2024 as compared to Rs. 25.12 Cr. as on March 31, 2023. The company reported on time portfolio of 65.17% as on FY24 as compared to 71.10% in previous year. Metrocity Finance had a GNPA and NNPA of 2.15 percent and 1.83 percent respectively in FY24 as compared to 1.55 percent and 1.27 percent in FY23 and 2.70 percent and 2.32 percent in FY22. |
| Weakness |
| Geographical Concentration: MFPL has a major presence in one district, i.e. Jaipur ~95 percent and remaining 5 percent in the other Seven districts. This exposes MFPL to high geographical concentration risk. Thus, business performance is expected to remain exposed to the competitive landscape in these regions and the occurrence of events such as natural calamities, which may adversely impact the credit profile of the borrowers. Low collection efficiency The company demonstrated moderate collection efficiency of 72.91 percent on the overall portfolio as on Mar’24. The Six Month average for overall collection efficiency stood at 70.05 percent and the six month average for current month dues collection efficiency stood at ~88.89 percent. The company has shown month on month improvement in over all collections and monthly due collections in the past 10 months, their enhancement in collections will be a key rating driver for the company. |
| Rating Sensitivity |
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| Liquidity Position |
| Adequate |
| MFPL’s overall liquidity profile remains adequate in near to medium term. MFPL’s borrowings stood at ~Rs. 26.10 Cr. with a gearing of ~3.10 times as on March 31, 2024. The borrowings of MFPL have an average maturity of ~18 to 48 months against average lending tenure of ~18 to 36 months. The company has maintained cash and bank balance of ~Rs. 0.16 Cr. as on March 31, 2024. |
| Outlook: Stable |
| Acuité believes that Metrocity will maintain a ‘Stable’ outlook on account of its experienced management. The outlook may be revised to 'Positive' in case the company is able to scale up its operations and geographically diversify while maintaining their asset quality. Conversely, the outlook may be revised to 'Negative' in case of continued growth challenges or asset quality pressures. |
| 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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