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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 100.00 | ACUITE B+ | Stable | Assigned | - |
| Total Outstanding Quantum (Rs. Cr) | 100.00 | - | - |
| Rating Rationale |
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Acuite has assigned its long-term rating of ‘ACUITE B+' (read as ACUITE B plus) on the Rs. 100.00 Cr bank loan facilities of Shri Baiju Trading and Investment Private Limited. The outlook is ‘Stable’.
Rating Rationale The rating assigned takes into account the experience of the promoter of more than two and half decades in the NBFC sector, conservative capital structure and comfortable asset quality. The rating also favourably factors in the improvement in the profitability metrics in FY2023 on account of strategic shift towards retail finance since FY2023. Howeve, the rating is constrained by modest scale of operations & geographic concentration in Uttar Pradesh. Going forward diversification into new geographies, improvement in the scale of operations along with improvement in the profitability margins, dilution of promoter support or movement in asset quality would remain a key monitorable. |
| About the company |
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Incorporated in 2019, Shri Baiju Trading and Investment Private Limited (SBTIPL) is registered as a Non-Banking Finance Corporation (NBFC) with RBI. The company provides different types of loan like Personal Loan, Loan Against Property (LAP), Business Loan etc, with majority portfolio dominated by personal loans (~80% in FY23). The company deals majorly in unsecured small ticket size loans with average ticket size being ~Rs.50k. For any loan above Rs.50k and upto Rs.15 lacs, a security is taken against the loan. The authorized directors are Mr. Atul Kumar and Ms Ayesha.
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| Analytical Approach |
| Acuité has considered the standalone financial and business risk profile of SBTIPL to arrive at the rating. |
Key Rating Drivers
| Strength |
| Experienced management
SBTIPL is promoted by Mr. Atul Kumar who has experience of more than two and a half decades in the NBFC, capital markets, insurance, rural markets and micro finance space. The company is also in the process to on board other seasoned professionals in the near term, which shall further boost the business risk profile to an extent. Acuité believes that SBTIPL’s business profile will be supported by its experienced promoter base and will be able to leverage their expertise to raise funding and grow its loan book.
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| Weakness |
| Modest level of AUM
The company has a modest level of AUM of Rs.45.58 Cr in FY23 as against Rs.131.16 Cr in F22. The AUM declined in FY2023 as most of the inter corporate loan was matured in FY2023. Prior to 2022, the company was mostly into inter corporate lending where the lending rates were relatively lower. The company full-fledged ventured in the Retail finance business since FY2023 mainly in rural areas like U.P, where the lending rates are high at ~30%-35%. The company aims to make it a complete micro retail loan book and refrain from corporate and any other big ticket size loan. Acuite expects that strategic shift towards micro finance retail loan shall help the company improve it's loan book in the near to medium term. Geographical concentration risk The company is exposed to high geographical concentration risk as ~80% of the loan book is concentrated towards Uttar Pradesh. 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 SBTIPL's borrowers. The company’s ability to maintain its asset quality while increasing its presence in the newer geographies will remain a key rating monitorable. |
| Rating Sensitivity |
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| All Covenants |
| None. |
| Liquidity Position |
| Adequate |
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The company has positive cumulative cash flows upto one year. Further, the company is planning to raise funds in the near term which shall improve the liquidity going forward. Also, there is a net surplus liquidity of Rs. 24.25 Cr. as on June-23.
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| Outlook: |
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Acuité believes that SBTIPL will maintain ‘Stable’ outlook over the near to medium term owing to the experience of promoters. The outlook may be revised to ‘Positive’ in case SBTIPL demonstrates significant and sustainable growth in its scale of operations while mitigating asset quality risks in portfolio and growing profitability. Conversely, the outlook may be revised to ‘Negative’ in case of any challenges faced in scaling up operations, resource raising ability and in case of any sharp deterioration in asset quality and profitability levels.
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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): |
| None. |
| 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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| Rating History : |
| Not Applicable |
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