Emerging March 2024 I (Originator: ITI Finance Limited) 'Provisional CRISIL AA (SO)' assigned to Series A1 PTCs
Rating Action
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million *The rated amount for Series A1 PTCs is Rs 39,96,08,432. @ A prefix of 'Provisional' indicates that the rating centrally factors in the strength of specific structures, and is contingent upon occurrence of certain steps or execution of certain documents by the issuer, as applicable, without which the rating would either have been different or not assigned ab initio. This is in compliance with a May 6, 2015 directive ‘Standardizing the term, rating symbol, and manner of disclosure with regards to conditional/ provisional/ in-principle ratings assigned by credit rating agencies' by Securities and Exchange Board of India (SEBI) and April 27, 2021 circular ‘Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments’ by SEBI. |
Detailed Rationale CRISIL Ratings has assigned its ‘Provisional CRISIL AA (SO)’ rating to Series A1 PTCs issued by ‘Emerging March 2024 I’. The pool is backed by used car and commercial vehicle loan receivables originated by ITI Finance Ltd (CRISIL A-/Negative’). The ratings are based on the credit support available to the PTCs, the credit quality of the underlying pool receivables, ITI Finance Limited’s origination and servicing capabilities, and soundness of the transaction’s legal structure.
Total credit support available in the transaction is as follows:
Series A1 PTC holders are entitled to receive timely interest and timely principal payments (92% of scheduled principal billing) on a monthly basis with turbo amortization of residual cashflows. |
Key Rating Drivers & Detailed Description Strengths:
Weaknesses:
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Liquidity: Strong
CRISIL Ratings has adequately factored these aspects into its rating analysis. |
Rating Sensitivity factors Upward
Downward
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About the Pool The pool securitised comprises of car and commercial vehicle loans. The pool has weighted average number of instalments paid of 17.3. The pool has moderate geographic concentration with top three states accounting for 65.7% of pool principal. Average ticket size is Rs 3.6 lakhs with weighted average interest rate of 18.4%. All the contracts in the pool were current as on pool cut-off date (18th March,2024). CRISIL Ratings has adequately factored all these aspects in its rating analysis.
Additional disclosures for Provisional ratings: The provisional rating is contingent upon execution of the following documents, as applicable:
Executed Legal Documents
Other Documents
The provisional rating shall be converted into a final rating after receipt of transaction documents duly executed within 90 days from the date of issuance of the instrument. The final rating assigned post conversion shall be consistent with the available documents. In case of non-receipt of the duly executed transaction documents within the above-mentioned timelines, the rating committee of CRISIL Ratings may grant an extension of up to another 90 days in line with its policy on provisional ratings.
Rating that would have been assigned in absence of the pending documentation: In the absence of documentation considered while assigning provisional rating as mentioned above, CRISIL Ratings would not have assigned any rating.
Risks associated with provisional nature of credit rating: A prefix of 'Provisional' to the rating symbol indicates that the rating is contingent upon execution of certain documents by the issuer, as applicable. In case the documents received deviates significantly from the expectations, CRISIL Ratings may take an appropriate action including placing the rating on watch or a rating change on a case to case basis. In the absence of the pending documentation, the rating on the instrument would either have been different or not assigned ab initio.
A rating rationale/report indicating the conversion of the ‘provisional’ rating into ‘final’ following receipt of all the required final legal documents will be published on the CRISIL website. Please click on the link below for detailed information on CRISIL’s policy on provisional rating: Revision in CRISIL policy for assigning ‘provisional’ rating.
Counterparty details
About the originator ITI Finance is a Mumbai-based, non-deposit-taking systemically important NBFC that majorly operates in the three-wheeler passenger, used private, and commercial vehicle financing segments. Its AUM stood at Rs 864 crore as on March 31, 2023 and it has increased to Rs 1146 crore as on September 30, 2023. The company has been reducing its exposure to three-wheeler and heavy commercial vehicles and will focus on used private and light commercial vehicles over the medium term.
ITI Finance commenced operations in 2012, and operated as a subsidiary of ITI (formerly, Fortune Financial Services (India) Ltd), a holding company of the ITI group. In 2015, Mr Sudhir Valia (the group’s key promoter) and his family members increased their stake in ITI Finance to around 75%, while ITI Ltd retained 25% ownership. Mr Chintan Valia, son-in-law of Mr Sudhir Valia, is the managing director.
For fiscal 2023, group-level PAT including the PAT of ITI Finance was Rs 26 crore on total income (net of interest expense) of Rs 494 crore, as compared with adjusted PAT of Rs 12 crore on total income (net of interest expense) of Rs 477 crore in the fiscal 2022. RoMA was 1.1% and 0.6% during the same time periods. The PAT was Rs 25 crore in first half of fiscal 2024 with a RoMA of 1.8%. |
Key Financial Indicators
The above ratios are calculated as per CRISIL Rating methodology |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
1 crore = 10 million &Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, and exercise of the clean-up call option *Additional credit support includes Rs. 9.82 crore in form of scheduled cash flow subordination (assuming zero prepayments) (22.6% of pool principal) **ISIN not received as of date |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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Criteria Details
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