 "Ratings alone shouldn't be used for investment decisions")
Kolkata-based non-banking lender Srei Infrastructure Finance (SIFL) is facing risks from weak asset quality, declined profitability, drop in capital adequacy ratio, and higher gearing (leverage). Brickwork Rating has downgraded the rating for debentures from "AA" to "A+".
Besides decreasing asset base, weak asset quality due to weak credit profile of the portfolio, SIFL has also witnessed a significant decrease in profitability in Q1FY20 due to increasing interest cost and higher provisions, declining capital adequacy ratio (CAR).
As on June 30, 2019, the CAR was 15.57 per cent (Tier-I CAR stood at 10.79 per cent), which is very close to the RBI-prescribed minimum
