| Namdev Finvest Private Limited | ||||||
| 'CRISIL BBB / Stable / CRISIL A2' assigned to Bank Debt and Debt Instruments | ||||||
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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 BBB/Stable/CRISIL A2’ ratings to the bank facilities and debt instruments of Namdev Finvest Private Limited (NFPL).
The rating reflects Namdev’s comfortable capitalisation metrics backed by timely equity raises and internal accruals amidst the comfortable earnings profile and strong management team supported by an involved board and advisors. The asset quality metrics too for the company have remained comfortable even during the Covid period, however, sustainability of the same as the portfolio scales up is a key monitorable.
NFPL is a traditional branch-based Non-Banking Financial Company (NBFC) headquartered in Jaipur, Rajasthan catering to the financially underserved customers. NFPL operates in the states of Rajasthan, Gujarat, Madhya Pradesh and Punjab and it has a network of 83 branches.
NFPL offers diverse range of loan products to MSMEs, two and three-wheeler buyers, commercial vehicle owners, and supports adoption of environment friendly green goods and vehicles by providing loans for electric vehicles, solar rooftops, etc. |
Analytical Approach CRISIL Ratings has evaluated the standalone business, financial and management risk profile of NFPL. |
Key Rating Drivers & Detailed Description Strengths: Strong management team with experienced board members actively involved in operations Namdev Finvest was taken over by the new management under the leadership of Mr. Jitendra Tanwar in 2013. Since then the management is actively involved in operations and building its portfolio. In 2017, the team started focusing on building the MSME loan book. The management team has relevant experience in financial services. The management is also focused on building good governance systems. The board of the company includes seasoned professionals with long standing experience in financial services who are more actively involved in the company operations driving the strategy and operations of the company. The management team along with the strong board and advisors to the board should support the scale up in the portfolio.
Healthy capitalization Namdev Finvest has comfortable capitalization with Networth of Rs. 146.4 crore as on March 31, 2023 as against Rs. 123.7 crore as on March 31, 2022. Consequently, Overall capital adequacy ratio also remained comfortable at 23.88% as on March 31, 2023. The adjusted gearing too was comfortable at 4.6 times as on March 31, 2023. On a steady state basis, the gearing is expected to remain under 5 times on a steady state basis.
Capitalization metrics have been supported by the regular capital infusion and healthy internal accruals The company has raised Rs 89.4 crores since inception and has plans to raise additional equity in fiscal 2024. CRISIL Ratings expects capitalisation to remain comfortable supported by internal accruals and regular capital infusion.
Comfortable earnings profile Given the segment of operations, the Net Interest Margins (on total income basis) tends to be high and have remained over 7.5% (11.6% as a percentage of average AUM) during the last 3 years driven by the high yields on the portfolio given the inherent borrower profile. With controlled asset quality metrics, Namdev has been able to control its credit costs which has supported the earnings profile. The credit costs even during Covid were range bound and in the range of 0.1-0.2%. The credit cost continued to remain comfortable even in fiscal 2023 at 0.4%.
However, given the branch based business model, the operating expenses are elevtaed at 5.0% as on March 31, 2023 as against 4.8% as pn March 31, 2022. As the company increases its branch network and scales up its operations, operating expenses are likely to remain elevated even going forward.
Consequently, the return on managed assets (RoMA) remained comfortable and stood at 1.6% for fiscal 2023, as against 2.2% in fiscal 2022 and 3.1% in fiscal 2021. The ability of the company to manage its credit costs with the scaling up of operations will is a key monitorable.
Weaknesses: High, albeit improving, geographical concentration The company’s scale of operations remained modest with AUM at around Rs 627.7 crores as on March 31, 2023. Of the products offered MSME forms the major portion of the AUM (85%), followed by Two wheeler loans (11%), LCV/HCV/MUV (3%) and EV & Solar loans form (1%). In the last few years, the company has diversified its geographical composition and currently has a presence in 4 states - Rajasthan, Gujarat, Madhya Pradesh and Punjab. However, Rajasthan continued to dominate the majority of the portfolio with share of 87% as of March 31, 2023, which has improved from 95% as of March 31, 2022. While CRISIL Ratings expects a rapid scale up in the portfolio going forward, however, the ability of the company to further reduce the geographical concentration will remain a key monitorable.
Inherent vulenrability of asset quality metrics given the segment of operation The asset quality metrics of the company remains inherently vulnerable to slippages given the segment of operation. The company has put in place strong risk management systems and processes which have supported asset quality so far. The 90+ dpd for Namdev remaining comfortable at 1.1% as on March 31, 2023 and even during the pandemic remained in the range of 0.9-1.0%.
The same is also reflective of the healthy collection efficiency in the range of 97%-100% since the last 5 years. Even during the Covid period, the collections remained healthy, it dropped to 84% in April 2020 but picked up after that and peaked at 112% during the same period.
The company has put in place adequate underwriting practices and risk management practices where the credit team personally visits customers to gather essential information about their financial standing, employment details and repayment capacity. This along with the information obtained from credit bureaus and the recorded loan details helps the team make informed decisions regarding loan approvals, interest rates, and repayment terms.
Nevertheless, as the company scales up its operations in the newer geographies, its ability to manage asset quality metrics will remain a key monitorable. |
Liquidity: Adequate The liquidity profile of the company is comfortable as on March 31, 2023. The company has positive cumulative mismatches across buckets as on March 31, 2023. As on March 31, 2023, Namdev Finvest had cash and cash equivalents of Rs 173.42 crore, against which it had total cash outflow of Rs 127.48 crore for the next 6 months. |
Outlook: Stable CRISIL Ratings believes Namdev Finvest will maintain healthy capitalisation metrics and earnings profile while benefitting from the experience of the promoters and the board members. However, asset quality performance as the portfolio scales up is a key monitorable. |
Rating Sensitivity factors Upward Factors:
Downward Factors:
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About the Company Established in the year 1997, Namdev Finvest Private Limited (NFPL) is a RBI registered, non-deposit taking NBFC and is hedquartered in Jaipur, Rajasthan.
NFPL is driven by the vision to become the preferred lending institution for families and MSME business in rural and semi-urban markets. NFPL aspires to be a catalyst for change, particularly those at the bottom of the financial pyramid, with a strong commitment to serve the financially underserved and become a one-stop-shop solution by offering customized financial solutions.
The AUM of the company stood at Rs. 627.7 crore as on March 31, 2023 as against Rs. 346.2 crores as on March 31, 2022.
The company reported a profit after tax (PAT) of Rs. 12.1 crores on total income (net of interest expense) of Rs 56.5 crores for the fiscal 2023, as against PAT of Rs. 10.9 crores on total income (net of interest expense) of Rs. 39.2 crores in fiscal 2022. |
Key Financial Indicators
*All figures for Mar-23 are as per provisional financials ^based on year end averages |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be issued |
| 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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