| GIC Housing Finance Limited | ||||||||
| 'CRISIL AA+ / Stable' assigned to Non Convertible Debentures | ||||||||
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| 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 | ||||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL AA+/Stable’ rating to the Rs 795 crore non-convertible debenture of GIC Housing Finance Limited (GIC HF) and has reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on the existing debt instruments and bank facilities
CRISIL Ratings has withdrawn its rating on non-convertible debentures aggregating Rs 720 crore on the company's request as the outstanding against the same is nil and on receipt of confirmation from debenture trustee (See Annexure 'Details of Rating Withdrawn' for details). The withdrawal is in line with CRISIL Ratings withdrawal policy.
The ratings continue to reflect the strong support expected from GIC HF’s promoter and largest shareholder, General Insurance Corporation of India Re (GIC Re); and the company’s adequate capitalisation. These strengths are partially offset by modest asset quality and a moderate, albeit improving, scale of operations.
Collection efficiency for fiscal 2023 improved to 92.30 from 91.05% last fiscal. Collections will continue to remain a monitorable, as income streams of the borrowers have been impacted in the current challenging macro environment. |
Analytical Approach CRISIL Ratings assesses the standalone credit risk profile of GIC HF and continues to factor in the strong support from the parent, considering the strategic importance of the entity, largest shareholding, shared management, and high moral obligation of the parent on account of shared name and brand. |
Key Rating Drivers & Detailed Description Strengths: Expectation of strong support from the promoter and largest shareholder, GIC Re GIC Re and its erstwhile subsidiaries — National Insurance Co Ltd, The New India Assurance Co Ltd, The Oriental Insurance Co Ltd, and United India Insurance Co Ltd — together hold 42.41% equity stake in GIC HF as on March 31, 2023 while GIC Re is the largest shareholder with 15.26% stake in the Company. GICHFL has strong Board including CMDs of all 5 Promoter Insurance Companies where all decisions are taken collectively by the Board. Promoter Companies also depute its senior officers to GICHFL on time to time basis. GIC HF also derives management, operational, and financial support from GIC Re. Furthermore, the name sharing strengthens GIC Re's moral obligation to support the housing finance entity. GIC Housing will continue to benefit over the medium term from the strong support it receives from GIC-Re in terms of ownership, common branding, and managerial inputs
Adequate capitalisation The company had a sizeable networth of Rs 1,699 crore and tier-I capital adequacy ratio of 30.2% as on March 31, 2023 (Rs 1,511 crore and 24.5% as on March 31, 2022). While capital cushion to manage the asset-side risk reduced, it remains adequate with networth to net non-performing asset (NPA) ratio of 4.9 times as on March 31, 2023 (2.4 times as on March 31, 2022). Capitalisation is expected to remain stable over the medium term.
Weaknesses: Modest asset quality Asset quality metrics have witnessed a significant reduction in Gross NPA and was at 4.7% as on March 31, 2023, as compared to 8.6% as on March 31, 2022. Of the entire portfolio, loans against property (LAP) book also continued to witness relatively higher delinquencies
Around four years ago, the company revamped its systems and process to improve its asset quality. CRISIL Ratings understands that the current NPAs have been primarily from the portfolio originated prior to fiscal 2019 and recent originations have negligible delinquencies. Further, over the last couple of years, the company has shifted its focus towards home loans, particularly towards salaried customers. Hence, the proportion of non-salaried customers is likely to decline over the medium term.
However, the company’s ability to arrest slippages and manage further credit costs, particularly given the challenging environment, remains a key monitorable, as does its ability to recover from NPAs.
Moderate, albeit improving, scale of operations The company remains a relatively small player in the Indian housing finance industry with around 1% market share. The loan book stood at Rs 10,652 crore as on March 31, 2023 (Rs 11711 crore as on March 31, 2022 net of provision). Although the loan book is concentrated in Maharashtra, the company is consciously growing its book outside the state (particularly Hyderabad, Bengaluru, and Gurgaon) to achieve better geographical diversification. Consequently, proportion of book in Maharashtra reduced to 34% as on March 31, 2023, from 50% in fiscal 2018. |
Liquidity: Strong Given the longer tenure on asset side, the asset and liability management (ALM) profile as on March 31, 2023, had positive cumulative mismatches in upto one year bucket, excluding sanctioned but unutilised bank lines. Liquidity position remains adequate supported by adequate unutilised bank lines. The company had unutilised bank lines of Rs 1,190 crore as on March 31, 2023, compared to debt repayment of Rs 2051 crore (including Rs 350 crore in CP) till September 2023. |
Outlook: Stable CRISIL Ratings believes GIC Re will continue to support GIC HF, and the latter will maintain adequate capitalisation over the medium term. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company GIC HF was founded in 1989 by GIC Re and its erstwhile subsidiaries, National Insurance Co Ltd, The New India Assurance Co Ltd, The Oriental Insurance Co Ltd, and United India Insurance Co Ltd, together with Unit Trust of India (UTI), Industrial Credit and Investment Corporation of India (ICICI), Industrial Finance Corporation of India (IFCI), Housing Development Finance Corporation (HDFC) and State Bank of India (SBI), all of which contributed to the initial share capital. Later on HDFC, SBI, ICICI, UTI, and IFCI sold their holding in GIC HF and ceased to be promoters
As on March 31, 2023, the promoter group (consisting of General Insurance Corporation of India, National Insurance Company Limited, The New India Assurance Company Limited, The Oriental Insurance Company Limited and United India Insurance Company Limited) held a 42.41% stake in the company, with GIC Re (15.26%) being the largest shareholder.
GIC HF provides individual housing loans to the middle to low income group in Tier-II and Tier-III cities. The portfolio mix consisted of 86% housing loans and 14% LAP, while the borrower profile comprised of 77% salaried customers and 23% non-salaried customers, as on March 31, 2023. The company had a network of 72 branches as on March 31, 2023, most of which were concentrated in Maharashtra.
Profit after tax (PAT) was Rs 213 crore on total income of Rs 1,129 crore for fiscal 2023 against Rs 174 crore and Rs 1,156 crore, respectively, in last fiscal. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be issued
Annexure - Details of Rating Withdrawn
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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Criteria Details
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