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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 20.00 | ACUITE BBB | Positive | Assigned | - |
| Bank Loan Ratings | 250.00 | ACUITE BBB | Positive | Reaffirmed | Stable to Positive | - |
| BOND | 100.00 | ACUITE BBB | Positive | Reaffirmed | Stable to Positive | - |
| Non Convertible Debentures (NCD) | 150.00 | ACUITE BBB | Positive | Reaffirmed | Stable to Positive | - |
| Total Outstanding | 520.00 | - | - |
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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. 20.00 Cr. Bank Loan Facility of Mufin Green Finance Limited(Erstwhile APM Finvest Limited) (MGFL). The outlook is 'Positive'.
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(Erstwhile APM Finvest Limited) (MGFL). The outlook is revised from ‘Stable’ to 'Positive'. Acuité has reaffirmed its long term rating of ‘ACUITE BBB’ (read as ACUITE triple B) to the Rs 150 Cr NCD of Mufin Green Finance Limited(Erstwhile APM Finvest Limited) (MGFL). The outlook is revised from ‘Stable’ to 'Positive'. Acuite has reaffirmed the long term rating of ‘ACUITE BBB’ (read as ACUITE triple B) to the Rs 250 Cr the bank facilities of Mufin Green Finance Limited(Erstwhile APM Finvest Limited) (MGFL). The outlook is revised from ‘Stable’ to 'Positive'. Rationale for the rating The revision in outlook factors in the healthy growth in AUM and comfortable capitalization. The disbursement levels have shown significant traction; accordingly, the AUM levels have increased to Rs. 602.2 Cr. as on Mar 31, 2024 (Prov), from Rs. 261.61 Cr. as on Mar 31, 2023. The rating also considers comfortable capitalization levels and the capital infusion of Rs 81.84 Cr in FY2024 resulting in the improvement of Net worth from Rs 153.68 Cr. as on FY23 to Rs 245.97 Cr. as on FY24(Prov), the Capital Adequacy Ratio (CAR) of the company stood at 36.76 percent as on March 31, 2024 (Prov). The rating continues to factor in rich experience of management in E- Vehicle financing, cumulatively the group has financed~40,000 E-vehicle since 2016. The rating strengths are partially offset by moderate asset quality and moderate scale of operations and low seasoning of the loan portfolio. 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 50 percent as on March 31, 2024. 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 ~40,000 E-vehicles. The Hindon Mercantile Limited (HML)owned 54.44% stake in MGFL as of Mar 2024. 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.245.97 Cr. and debt of Rs. 651.87 Cr. as on March 2024 (Prov). MGFL received a capital infusion of Rs. 81.48 Cr. in FY2024 from HNI and family funds and its existing investors. 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 36.76 percent as on Mar 31, 2024(Prov). The company has raised Series B equity in the form of warrants of Rs 140 Cr out of which Rs77 Cr of the capital was received in FY24 and the remaining is expected to be received in later part of Q1FY2025 which will further improve the company's capitalization level. Improving AUM MGFL extends loan towards e-vehicles and its infrastructure 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. 602.2 Cr as on March 31, 2024 (Prov) as against Rs 261.61 Cr as on March 31, 2023 and Rs. 19 Cr as on March 31, 2021. This improvement in AUM was on account of improvement in disbursements which stood at Rs. 637.85 Cr as on FY2024 and Rs. 273.45 Cr. in FY2023 as against Rs. 12.10 Cr. in FY 2021. |
| 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 36,031 customers across 14 states via OEM and dealer network in India. The AUM stood at ~Rs 602.2 Cr as on Mar 2024(Prov) (Rs.261.61 Cr. as on March 31,2023 and Rs.48 Cr. as of March 2022), of which vehicle loans comprised ~86% followed by loans towards infrastructure for E- Vehicles at ~13% and business & personal loan at ~1%. The AUM grew significantly in FY2023 and FY2024 mainly on account of E-vehicle loan disbursals (~75% of the total disbursements during FY2024). Though these loans are offered for short tenor ranging 18-24 months, disbursements of these loans were made largely in the FY2023 and FY2024 indicating limited seasoning of the newly disbursed AUM. As on March 31, 2023, the company’s AUM is majorly concentrated in Uttar Pradesh (27%) followed by Delhi (24 %), Bihar (15%), and rest 34% 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 asset quality; albeit improving: The portfolio increased in FY24 on account of uptick in disbursals which picked up since later half of FY22. Majority of the portfolio remains newly originated indicating the low seasoning. MGFL's asset quality had witnessed improvement with GNPA and NNPA of 1.83 percent and 1.43 percent as on March 31, 2024 respectively as against 2.61 percent and 1.99 percent respectively in FY023. Acuité notes the improvement in the on-time portfolio standing at ~87 percent as on Mar, 2024. 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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| Liquidity Position |
| Adequate |
| MGFL’s liquidity profile as on Dec, 2023 is well matched with no negative cumulative mismatches across time buckets. The company reported cash and cash equivalents of Rs.187 Cr. as on Dec 31, 2023. |
| Outlook: Positive |
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Acuité believes that MFGL'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 scale of operations and 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
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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 • 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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