CRISIL, ICRA upgrade Kotak Mahindra Prime's long-term debt instruments rating to AA+/Stable

Credit rating agencies, CRISIL and ICRA both have upgraded the ratings on the long-term debt instruments of Kotak Mahindra Prime Ltd (KMPL) to AA+ Stable.

CRISIL upgraded the rating to ‘CRISIL AA+/Stable’ from CRISIL AA/Stable for various KMPL’s long-term debt instruments. The rating on the company’s short-term debt instruments have been reaffirmed at ‘CRISIL A1+’. Similarly, ICRA has upgraded its ratings on the various long-term debt instruments of KMPL to ‘ICRA AA+/Stable’ from ‘ICRA AA/Stable’

CRISIL’s rating rationale: The revision in ratings by CRISIL factors in the strong asset quality in its core automobile finance business, healthy capitalization and stable earnings profile. The rating further factors in combined financial and business risk profiles of KMPL, its parent Kotak Mahindra Bank Ltd (KMBL) (rated ‘FAAA/Stable/CRISIL A1+’), and KMBL’s other major subsidiaries and the expectation of a continued improvement in the Kotak group’s business risk profile.

ICRA’s rating rationale: The revision in ratings by ICRA factors in KMPL’s strong parentage, significant operational and financial synergies between KMPL and KMBL, demonstrated ability to manage auto finance business through various economic cycles, good control over asset quality in the core business segments, adequate capitalization levels and comfortable liquidity profile. The ratings also take into account the steady improvement in the operating and financial performance of KMPL over the past few years.

The long-term AA+ rating indicates high degree of safety and carries low credit risk. The Short-term A1+ rating indicates a very strong degree of safety and carries the lowest credit risk.