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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 150.00 | ACUITE BBB | Stable | Assigned | - |
| Bank Loan Ratings | 100.00 | ACUITE BBB | Stable | Reaffirmed | - |
| BOND | 100.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 90.00 | ACUITE BBB | Stable | Assigned | - |
| Non Convertible Debentures (NCD) | 60.00 | ACUITE BBB | Stable | Reaffirmed | - |
| Total Outstanding | 500.00 | - | - |
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Rating Rationale |
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Acuité has assigned its long term rating of ‘ACUITE BBB’ (read as ACUITE triple B) to the Rs. 90.00 Cr. Non Convertible Debentures of Mufin Green Finance Limited (MGFL). The outlook is ‘Stable’.
Acuité has assigned its long term rating of ‘ACUITE BBB’ (read as ACUITE triple B) to the Rs. 150.00 Cr. Bank Loan Facility of Mufin Green Finance Limited (MGFL). The outlook is ‘Stable’. Acuité has reaffirmed its long term rating of ‘ACUITE BBB’ (read as ACUITE triple B) to the Rs. 100.00 Cr. Bond of Mufin Green Finance Limited (MGFL). The outlook is ‘Stable’. Acuité has reaffirmed its long term rating of ‘ACUITE BBB’ (read as ACUITE triple B) to the Rs 60 Cr NCD of Mufin Green Finance Limited (MGFL). The outlook is ‘Stable’. Acuite has reaffirmed the long term rating of ‘ACUITE BBB’ (read as ACUITE triple B) to the Rs 100 Cr the bank facilities of Mufin Green Finance Limited (MGFL). The outlook is ‘Stable’ Rationale for the rating The rating reaffirmation continues to factor in the rich experience of management in E- Vehicle financing, cumulatively the group has financed~18,700 E-vehicles and disbursed of over ~Rs 200 Cr. since 2016. The disbursement levels have shown significant traction, accordingly the AUM levels have increased to Rs. 261.61 Cr. as on Mar 31, 2023, from Rs. 48.39 Cr. as on March 31, 2022. The AUM further grew and stood at Rs 399.49 Cr. The rating also considers healthy capitalization levels where Capital Adequacy Ratio (CAR) of the company stood at 54.1 percent as on March 31, 2023, though the CAR saw slight deterioration in H1FY24 standing at 37.36 percent it still remained at comfortable levels .The rating strengths are partially offset by moderate asset quality and modest scale of operations. The company scaled up its portfolio mainly in first half of FY2023 indicating low seasoning. Also, the portfolio remained geographically concentrated in Uttar Pradesh and Delhi having a collective exposure of over 60 percent as on March 31, 2023. Going forward, MGFL's ability to raise capital, demonstrate sustainable growth in its scale of operations while maintaining asset quality and profitability metrics will remain a key monitorable. |
| About the company |
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Mufin Green Finance Limited is the Non-Banking Financial Company Non-Deposit Taking (NBFC-ND) registered with Reserve Bank of India. The Company was incorporated on 13th May, 2016 in state of Rajasthan. Mufin Green Finance was acquired by Hindon Mercantile Limited in March 2022. The company is now a part of the Mufin group. The group has been extending loans toward E- vehicles since 2016 and the portfolio of E-vehicles was later transferred to the taken over company Mufin Green Finance. The company is engaged in financing overall electric vehicle ecosystem comprising of all kinds of vehicles running on battery and charging infrastructure. The objective of the company is to enhance the electric vehicle ecosystem of India.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has taken a standalone view on the business and financial risk profile of Mufin Green Finance Limited.
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| Key Rating Drivers |
| Strength |
| Support from Promoters and Investor
Mufin Green Finance Limited (MGFL) is a Delhi based Non-Deposit Non-Bank Finance Company (NDNBFC) engaged in providing vehicle loans and loans used towards developing infrastructure for E-vehicles. Mufin Green Finance is a part of Mufin group, which has been extending loans toward E- vehicles since 2016, the portfolio of E-vehicles was subsequently transferred to Mufin Green Finance. The Mufin group since inception has financed ~18,700 E-vehicles. The Hindon Mercantile Limited (HML)owned 57.83% stake in MGFL as of June 2023. Mr. Kapil Garg, co- promoter and MD of MGFL has experience of more than 15 years in Legal, Bank Audits, Compliance and Consultancy. The promoters are assisted by professional management team including Mr. Pankaj Gupta, Chief Executive Officer, possessing around 2 decades of experience of working with organisation like Naukri.com, Tech Mahindra’s Saral Rozgar and Saera Electric Auto (Mayuri Erickshaw). Acuité believes that company’s growth prospects will be supported by the promoter’s experience in this industry Comfortable Capitalization Levels and resource raising ability: The company has a comfortable capitalization marked by a networth of Rs.153.68 Cr. and a net debt of Rs. 225.99 Cr. as on March 2023. MGFL received a capital infusion of Rs. 45 Cr. in the month of September 22 from an equity fund named Incofin India. The company is in advance stages of discussions with various banks and FI for raising more funds. The company’s Overall CRAR has remained healthy at 37.36 percent as on Sep 30, 2023. The company has raised Series B equity in the form of warrants of Rs 140 Cr out of which 25 percent (~Rs 33Cr) of the capital was received in the month of December 2023 and the remaining is expected to be received in later part of Q4FY24 which will further improve the company's capitalization level. Improving AUM MGFL extends loan towards e-vehicles and its infrastrucutre with average ticket size ranging between 1.5 lakhs to 3.5 lakhs with average tenure from 18 to 36 months. Total AUM of Mufin Green Finance stood at Rs. 261.61 Cr as on March 31, 2023, as against Rs. 48.39 Cr as on March 31, 2022 and Rs. 19 Cr as on March 31, 2021. This improvement in AUM was on account of improvement in disbursements which stood at Rs. 273.45 as on FY2023 and Rs. 112.55 Cr. in FY2022 as against Rs. 12.10 Cr. in FY 2021. The AUM further improved and stood at Rs 399.49 Cr and the disbursements made by the company in H1FY24 was Rs 239.85 Cr. |
| Weakness |
| Limited track record of operations coupled with limited seasoning of newly disbursed portfolio and geographical concentration:
MGFL commenced its lending operations with vehicle loans and gradually diversified its product offerings to infrastructure financing for E-vehicles. MGFL caters to over 21,643 customers across 10 states via OEM and dealer network in India. The AUM stood at ~Rs 399.49 Cr as on Sept 2023 (Rs.261.61 Cr. as on March 31,2023 and Rs.48 Cr. as of March 2022), of which vehicle loans comprised ~88% followed by loans towards infrastructure for E- Vehicles at ~8%,and business & personal loan at ~4%. The AUM grew significantly in FY2022 and FY2023 mainly on account of E-vehicle loan disbursals (~66% of the total disbursements during FY2023). Though these loans are offered for short tenor ranging 18-24 months, disbursements of these loans were made largely in the second half of FY2022 and FY2023 indicating limited seasoning of the newly disbursed AUM. As on March 31, 2023, the company’s AUM is majorly concentrated in Uttar Pradesh (33.73%) followed by Delhi (30.87 %), Bihar (14.52%), and rest 20.9% of AUM is covered in remaining states, namely, Uttarakhand, Madhya Pradesh and Rajasthan. Thus, the company's performance is expected to remain exposed to the competitive landscape in these regions, 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 the credit profile of MGFL. Acuité believes that the ability of the company to maintain sustainable growth of portfolio while managing its asset quality through business cycles will be key monitorable. Moderate Earning Profile; albeit improving: MGFL's Net interest Income stood at Rs. 29.43 Cr in FY23 as compared to Rs. 3.54 Cr in FY22 and a PAT of Rs. 8.12 Cr.for FY2023 which has in turn declined from Rs. 10.9 Cr. in FY2022. The decline in PAT is on the account of increased operating and credit costs for the year. The Opex as a percentage of earning assets increased from 4.01 in FY22 to 5.97 in FY23. The increase in operating expense is also on account of elevated staff expenses due to senior level recruitment in FY23. Company's earning profile has seen improvment in H1FY24 where the Net interest Income and PAT stood at Rs 23.95 Cr and Rs 7.47 Cr respectively. Acuite believes that the company’s ability to achieve operational efficiencies while scaling up the portfolio would be a key rating monitorable. Moderate asset quality; albeit improving: The portfolio increased in FY23 on account of uptick in disbursals which picked up since FY22. Majority of the portfolio remains newly originated indicating the low seasoning. MGFL's asset quality had witnessed deterioration with GNPA and NNPA of 2.61 percent and 1.99 percent as on March 31, 2023 respectively (Nil as on March 31, 2022) with the deterioration in on-time portfolio which stood at 65.33 percent owing to niche customer profile. Acuité notes the improvement in the asset quality as on H1FY24 where the GNPA and NNPA stood at 2.04 and 1.55 with the on-time portfolio standing at ~82 percent as on Sept 30, 2023. However, the company’s business is yet to stabilize given its moderate scale of operations; its scalability and the asset quality needs to be monitored given the inherent vulnerability of the borrower segment. |
| ESG Factors Relevant for Rating |
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Mufin Green Finance Limited (MGFL) belongs to the Non-Banking Financial Companies (NBFC) sector which complements bank lending in India. Adoption and upkeep of strong business ethics is a sensitive material issue for the financial services business linked to capital markets to avoid fraud, insider trading and other anti-competitive behaviour. Other important governance issues relevant for the industry include management and board compensation, board independence as well as diversity, shareholder rights and role of audit committee. As regards the social factors, product or service quality has high materiality so as to minimise misinformation about the products to the customers and reduce reputational risks. For the industry, retention, and development of skilled manpower along with equal opportunity for employees is crucial. While data security is highly relevant due to company’s access to confidential client information, social initiatives such as enhancing financial literacy and improving financial inclusion are fairly important for the financial services sector. The material of environmental factors is low for this industry.
The company’s board comprises of a total of six directors out of which four are independent directors and one female directors. MGFL maintains adequate disclosures with respect to the various board level committees mainly audit committee, nomination and renumeration committee along with stakeholder management committee. MGFL also maintains adequate level of transparency with regards to business ethics issues like related party transactions, investors grievances, litigations, and regulatory penalties for the group, if relevant. In terms of its social impact, MGFL is actively engaged in community development programmes through its CSR committee. For better servicing of its customers, the entity has disseminated a step-by-step guide for loan appraisal, the document requirements and its services and charges. |
| Rating Sensitivity |
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| All Covenants |
| Mufin Green Finance Ltd is subject to covenants stipulated by its lenders/investors in respect of various parameters like asset quality among others. |
| Liquidity Position |
| Adequate |
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MGFL’s liquidity profile as on Seot 30,2023 is well matched with no negative cumulative mismatches across time buckets. The company reported cash and cash equivalents of Rs.152 Cr. as on Sep 30, 2023.
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| Outlook: Stable |
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Acuité believes that the MGFL will maintain a ‘Stable’ outlook over the medium term supported by future capital infusions and expansion process. The outlook may be revised to ‘Positive’ in case of significant and sustainable growth in its AUM while improving its profitability, asset quality and capitalization indicators. Conversely, the outlook may be revised to ‘Negative’ in case of challenges in attaining optimal capital support or significantly higher than expected pressure on asset quality or profitability margins.
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| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||
*Total income equals to Net Interest Income plus other income
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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 • 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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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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