Home Credit India gets stable rating from Fitch Group Company, upgrade from CARE

Home Credit India Finance Pvt. Ltd., one of India's fastest growing non-banking finance company, has been assigned an IND A-/Stable rating from India Ratings and Research Pvt. Ltd., a Fitch Group company.

Separately, the rating has been upgraded by CARE Ratings to A- from BBB+. The new rating is based on factors like experienced management team, comfortable capitalization and liquidity, adequate risk monitoring & appraisal systems, unique business model, high focus on the Indian market, cost-efficient point of sale network and continuous support by Home Credit Group.

According to India Ratings, one of the key rating drivers is India being a high potential market in Asia for Home Credit Group.

"India offers a large population with high mobile penetration and low competition in financing low-ticket unsecured consumer durables segment. Based on the credit history available, the company leverages the credit life cycle of existing customers by providing cross-sell personal loans," the rating agency said.

Noting that Home Credit India's market share in the mobile financing segment has been rising steadily, India Ratings said this gives the consumer loans provider a competitive edge in key geographies dependent on small retail format players for mobile sales. The increasing market share along with Home Credit India's foray into online lending further improves scalability.

In a separate note, CARE Ratings said the capitalization of Home Credit India is comfortable and is supported by continuous equity infusion from the promoters. As against the regulatory requirement of having a minimum capital adequacy ratio (CAR) of 15%, the company had CAR of 26.33% as of March 31, 2018. Highlighting adequate capitalization as an important driver, India Ratings said, "Its liquidity is adequate due to the short tenor advances extended."

According to Anirban Majumder, Chief Financial Officer, Home Credit India, "The rating demonstrates the growing confidence in the underlying strength and long-term potential of our business in India's retail credit market. This will enable us to strengthen and broaden our relationships with banks and financial institutions that will help penetrate deeper into capital market with various funding instruments. It is also an affirmation of HC Group's proven partnership model with manufacturers and retailers and its ability to offer seamless online loans, providing customers an omni-channel experience, choice and convenience."

In its efforts to leverage the latest technology for growing the scale and size of operations, India Ratings said Home Credit's underwriting standards and tools are based on a risk analytics framework, the efficiencies of which have been demonstrated in successful geographies such as China and Russia. Both the rating agencies also affirmed that financial support and credit profile of Home Credit B.V. ('HCBV' or 'the Group'), the Netherlands-based holding company for Home Credit's multi-channel consumer finance operations in Central and Eastern Europe, Asia and the US, is another key driver.

To support the growth of business, Home Credit India has been diversifying funding base in terms of types of instruments and maturity, and continues to attract flexible and stable funding sources based on long-term, mutually beneficial relationships with investors. In the January - March quarter, Home Credit India raised Rs. 600 crore through a mix of securitization transactions, terms loans, and non-convertible debenture (NCD) issue. The company plans to use the funding to augment its loan book, invest in technology infrastructure, and develop financing products catering to the needs of customers with little or no credit history.

Since its launch in India in 2012, Home Credit India has been consistently expanding operations. The company had a customer base of nearly 2 million in 2016, driven by pan-India expansion across major markets, a range of diversified and innovative products backed by superior customer experience. In 2017 alone Home Credit added another 3.5 million customers, further consolidating its position as a leading consumer finance provider.