|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 16.31 | ACUITE BBB | Upgraded & Withdrawn | - |
| Bank Loan Ratings | 83.69 | Not Applicable | Withdrawn | - |
| Non Convertible Debentures (NCD) | 20.00 | ACUITE BBB | Stable | Upgraded | Positive to Stable | - |
| Total Outstanding | 20.00 | - | - |
| Total Withdrawn | 100.00 | - | - |
|
Rating Rationale |
|
Acuité has upgraded the long-term rating from ‘ACUITE BBB-’ (read as ACUITE triple B minus) to 'ACUITE BBB’ (read as ACUITE triple B) on the Rs. 20.00 Cr. non-convertible debentures of MoneyBoxx Finance Limited (MFL). The outlook is revised from 'Positive' to‘Stable’. Acuité has withdrawn and upgraded of the long-term rating from ‘ACUITE BBB-’ (read as ACUITE triple B minus) to 'ACUITE BBB’ (read as ACUITE triple B) on the Rs. 16.31 Cr. bank loan rating of Moneyboxx Finance Limited (MFL). Acuité has Withdrawn the long-term rating on the Rs. 83.19 Cr. bank loan rating of Moneyboxx Finance Limited (MFL) without assigning any rating as it is a proposed faclity. The rating withdrawal is in accordance with Acuite’s policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the Company and No Objection Certificate received from the lender. Acuité has Withdrawn the long-term rating on the Rs. 0.50 Cr. bank loan rating of Moneyboxx Finance Limited (MFL) without assigning any rating as the facility is fully repaid. The rating withdrawal is in accordance with Acuite’s policy on withdrawal of rating as applicable to the respective facility / instrument. The rating is being withdrawn on account of request received from the Company and No Dues Certificate received from the lender. Rationale for the rating: The revision in outlook factors in the improvement in the business performance as relfected by an AUM of Rs. 729.59 Cr. as on March 31, 2024 from Rs. 343.97 Cr. as on March 31, 2023 demonstrating a YoY growth of 130 percent and expected improvement in profitability metrics. The rating continues to factor in the extensive experience of the management in financial services industry and capital raising ability. It has further aided in establishing robust underwriting standards as reflected by GNPA (on book) of 1.05 percent as on March 31, 2024 (0.83 percent as on March 31, 2023). The rating also factors in the adequate capitalization marked by CAR levels of 28.29 percent coupled with MFL's networth of Rs. 168.85 Cr. as on March 31, 2024. These strengths are however partially offset by a moderate earnings profile and risks associated with lending in unsecured segment. The company’s profitability raised to Rs.9.14 Cr. in FY24 from loss of Rs. 6.80 Cr. in FY23. MFL added 39 branches in FY24. Acuité believes that the ability of company to mobilise low-cost funds through debt; timely raising equity capital and sustaining the profitabilitywill remain a key rating monitorable. |
| About the company |
| MoneyBoxx Finance Limited (MFL) is a BSE Listed NBFC providing small ticket loans to micro and small enterprises. It commenced its operations in February 2019 and is promoted by Mr Deepak Aggarwal and Mr Mayur Modi. As on August 2024, it operates in 8 states, i.e., Bihar, Rajasthan, Haryana, Madhya Pradesh, Punjab, Uttar Pradesh and Chhattisgarh through its branch network of 100 branches. The company is registered with RBI as Non-systematically Important NBFC engaged in lending and allied activities. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Acuité has considered standalone business and financial risk profile of MFL to arrive at the rating. |
| Key Rating Drivers |
| Strength |
| Experienced management MFL commenced its lending operations in February 2019. MFL is engaged in providing small ticket unsecured business loans to individual borrowers i.e. Livestock, Kirana, Retail Traders, micro manufacturers in Tier III cities and below with loans ranging from Rs 50,000 to 3,00,000 and average tenure of 24 months. The company has geographical presence in the states of Bihar, Rajasthan, Madhya Pradesh, Haryana, Punjab, Gujarat, Uttar Pradesh and Chhattisgarh with its network of 100 branches as on March 31, 2024 and outstanding portfolio of Rs. 729.57 Cr. as on March 31, 2024. MFL is promoted by Mr Deepak Aggarwal and Mr Mayur Modi, having two decades of experience in financial service industry. Mr. Deepak Aggarwal was a Founder Director of Avancer Capital Partners Private Limited, a boutique investment bank. He had been associated with Bank of America, KPMG, GE Capital, Infosys and Evalueserve in equity and credit risk analysis. Mr Mayur Modi has around two decades of experience in financial service industry across developed and emerging markets. He had been associated with GE Capital, JP Morgan and HSBC. The Board is ably supported by experienced management team with adequate and relevant experience in their respective fields. The board includes members like Mr. Uma Shankar Paliwal (Chairman and Independent Director), ex-executive director of RBI and independent director on multiple NBFCs, and Ms. Ratna Vishwanathan (Independent Director), ex-IAS Officer from CAG, ex-CEO of MFIN and currently heading India operations of a global NGO. Acuité believes that established presence of the promoters in the microfinance segment will be central to support the business risk profile of the company in the near to medium term. Sound asset quality; strong underwriting standards MFL’s overall loan portfolio stood at Rs. 729.57 Cr. as on March 31, 2024. The company has managed to maintain a sound asset quality as reflected in on-time portfolio at 97.46 percent as on March 31, 2024. The collection efficiency for current month due stood at 94.98 percent for Mar-24. The Gross NPA (on-book) as on March 31, 2024 stood at 1.51 percent with a Net NPA of 1.04 percent. The exposure to Livestock stood healthy of the total portfolio as on March 31, 2024, since most livestock borrowers have more than one source of income, which provides additional stability to income, thereby mitigating credit risks for MFL to a certain extent. Acuité believes that the ability of the company to demonstrate growth in its loan assets while maintain healthy asset qualitywill be crucial to the credit profile of the company. Comfortable capital structure and resource raising ability. The company's net worth increased to Rs. 168.85 Cr. as on March 31, 2024 from Rs. 76.40 Cr. as on March 31, 2023 . The increase in networth was supported by equity infusions of Rs. 91 Cr. during FY24 and Rs. 48.39 Cr. during FY2023. MFL’s capital position is adequate as reflected in the capital adequacy which stood at 28.29 percent as on March 31, 2024. The company had an outstanding debt of Rs. 452.23 Cr. as on March 31, 2024, translating to gearing ratio of 2.68 times (3.15 times as on March 31, 2023). MFL has demonstrated ability to raise funds from Banks and Financial Institutions. Acuité believes that the company’s comfortable capitalization levels and the ability to raise funds will support its growth plans over the medium term. |
| Weakness |
| Moderate earnings profile. MFL started its operations in February 2019. The company has demonstrated growth in scale of operations with an outstanding loan portfolio of Rs. 729.57 Cr. as on March 31, 2024 . MFL added around 35 branches in FY24. Nevertheless, through achieving scale and controlling credit costs, the company has been able to achieve profits in FY24. Operating Expense to Earning Assets (Opex) declined slightly from 14.56 percent for FY23 to 13.44 percent for FY24. The company reported a healthy Net Interest Margin (NIM) of 17.34 percent in FY24 from 14.79 percent for FY23. Acuité believes, the ability of MFL to increase operational efficiencies as it continues to scale up its lending portfolio will be key monitorable. |
| ESG Factors Relevant for Rating |
| Moneyboxx Finance Limited (MFL) belongs to the Non-Banking Financial Companies (NBFC) sector which complements bank lending in India. Some of the material governance issues for the sector are policies and practices with regards 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, sustainable financing including environmentally friendly projects and policies around data privacy. The industry, by nature has a low exposure to environmental risks. MFL is primarily engaged in extending credit towards SME loans which supports financial inclusion by financing of smaller businesses. MFL's board comprises of a total of six directors out of which two are independent directors and includes one female director. The company maintains adequate disclosures with respect to the various board level committees mainly audit committee, nomination and renumeration committee along with stakeholder relationship committee. MFL also maintains adequate level of transparency with regards to business ethics issues like related party transactions, investors grievances and whistle blower policy. In terms of social impact, the company has demonstrated its commitment through its goals of rural empowerment, gender inclusion, and improving the country's livestock capital. |
| Rating Sensitivity |
|
| Liquidity Position |
| Adequate |
| The company’s liquidity position is supported by cash and cash equivalents and investments totalling Rs. 113.64 Cr. as on March 2024. MFL’s overall liquidity profile remains adequate with no negative cumulative mismatches in near to medium term as per ALM dated March 31, 2024. The company's collection efficiency for scheduled demand for the month of March 2024 stood healthy at 94.98 percent. |
| Outlook: Stable |
| Acuité believes that MFL's credit profile will benefit from the extensive experience of the management and capital support which would further aid in the current growth momentum. The rating could be upgraded if the company is able to demonstrate improvement in its financial risk profile while maintaining asset quality metrics. Conversely, the outlook may be revised to ‘Stable’ in case the company faces higher than expected asset quality pressures, any challenges in scaling up operations or any deterioration in profitability parameters. |
| Other Factors affecting Rating |
| None. |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable. |
| Any other information |
| None. |
| Applicable Criteria |
|
• 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 • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm |
| Note on complexity levels of the rated instrument |
|
| |
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
Contacts |
About Acuité Ratings & Research |
