­Experienced management team; demonstrated support from marquee investors
PFL extends secured & unsecured loans towards MSME segments. The company also extends loss guaranteed MSME & consumer finance loans through their channel partners. PFL is promoted by Consilience Capital Management which is backed by marquee global investors. Over the past two years of operations, PFL has received continuous support in the form of periodic capital infusion from the promoter company and are expected to support the growth plans as and when required. Consilience Capital Management infused additional ~Rs. 760 Cr. in FY2022 in the form of Compulsory Convertible Preference Shares (CCPS) and have in total contributed around ~Rs. 1,255 Cr. in the form of equity and CCPS since FY2020. PFL is led by Mr. Peeyush Misra (Partner & Director) who has an experience spanning over two decades in risk management and running global businesses. He was earlier associated with Goldman Sachs (U.S.) as a Partner handling business including mortgages, asset backed securities, interest rate products amongst others. Mr. Peeyush is supported by other seasoned professionals like Mr. Amit Gupta, current CFO, who has more than two decades of experience in Indian financial services industry. PFL has also on board Mr. P R Seshadri (ex- MD & CEO Karur Vysya Bank; ex CEO BFC Bank & Citi Financial Consumer Finance) and Mr. Praveen Kumar Gupta (ex-MD Retail & Digital Banking SBI) acting as Independent Directors bringing in over 3 decades of experience in financial services industry. The management team also comprises of professionals with experience in SME, Consumer, Retail lending, Treasury & Risk Management, Fintech and Investment Banking.
Acuité believes that PFL’s business and credit profile over the near term will be supported by its ability to attract funding from diversified lenders/investors and confidence imposed by the investors in the business model of the company.

Healthy growth in AUM and sound asset quality
PFL commenced its business in February 2020. Over the years the company has expanded its presence in 16 states with its network of 86 branches spread across 63 districts/cities. PFL has been identifying geographies suited to its loan products and expanding rapidly with opening new branches and engaging with channel partners. The company had a branch network of 86 branches as on September 30, 2022. The company’s business sourcing model is a mix of branch led origination, via DSAs and via E-commerce partners whereby MSME loans are backed by FLDG. The arrangement with partners stands cancelled as on H1FY23. The company disbursed loans amounting to ~Rs. 382 Cr. in FY2021 and ~Rs. 1857 Cr. in FY2022. The company further disbursed Rs.1279.75 Cr. in H1FY23. The rapid branch expansion fuelled by disbursements has helped PFL to grow its loan portfolio to ~Rs. 1415 Cr. as on March 31, 2022, from ~Rs. 321 Cr. as on March 31, 2021, and ~Rs. 4 Cr. as on March 31, 2020. The AUM stood at Rs.1957.88 Cr. as on September 30, 2022. The growth in loan portfolio was primarily funded by capital funds deployed by the company and now PFL looks forward to diversify its funding mix by accessing funds from Banks and NBFC/FI’s. PFL’s healthy asset quality was marked by ontime portfolio at 98.73 percent and GNPA at 0.31 percent as on September 30, 2022. Overall average collection efficiency for 6 months ended September, 2022 stood at 99.01 percent .
Acuité expects PFL to maintain the growth momentum in a sustainable manner while diversifying its resource mix and maintaining asset quality.

Susceptible to inherent risks amidst relatively low seasoned portfolio
PFL commenced its lending operation in February, 2020 extending MSME loans (secured against property) having an average tenure of upto 9 years. The company also extends unsecured MSME loans having shorter tenure upto 2 years. PFL’s shorter duration loans also includes loss protected MSME and consumer finance loans through their channel partner having a tenure ranging 1.5-2 years. The company’s loan book of Rs. 1415.12 Cr. as on March 31, 2022 has grown significantly from Rs. 312.16 Cr. as on March 31, 2021 and from Rs. 4.26 Cr. as on March 31, 2020. The portfolio further stood at Rs. 1957.88 Cr. as on H1FY23.  Due to substantial growth in loan book in the last year, majority of the portfolio has a seasoning of around one year as on March 31, 2022
Around 63 percent of PFL’s portfolio of Rs. 1957.88 Cr. as on September 30, 2022 accounts for MSME loans (secured against property) and ~30 percent towards unsecured MSME loans. PFL’s overall credit profile is susceptible to concentration towards MSME loans which in turn are facing their own inherent risks and challenges. Further, since MSME loans are extended to self employed individuals for business purposes, the serviceability of these loans is directly dependent on the level of economic activity in the region. The company’s operations are fairly diversified in Maharashtra with ~19 percent followed by Delhi with ~16 percent of the overall outstanding portfolio as on September 30, 2022. Occurrence of events such as slowdown in economic activity or shifting of activity to other geographies could impact the cash flows of the borrowers, thereby impacting credit profile of PFL. Relatively low seasoning of portfolio with inherent risk associated with MSME lending might result in increased asset quality pressures due to current operating environment.
Acuité believes that the company’s ability to maintain its asset quality given the low seasoned loan book and increased presence in the newer geographies will remain a key rating monitorables.