Rating Rationale

Rating Rationale

February 06, 2025 | Mumbai

Norita 2W 2024

(Originator: Manba Finance Limited)

'Provisional Crisil A+ (SO)' assigned to Series A1 PTCs, 'Provisional Crisil BBB+ (SO)' assigned to Equity Tranche PTCs

Rating Action

Tranche Name	Amount Rated (Rs.Crore)	Outstanding Amount (Rs.Crore)	Balance Tenure^#	Credit Collateral (Rs.Crore)	Ratings/Credit Opinions	Rating Action
Series A1 PTCs	23.85	23.85	40	1.76	Provisional Crisil A+ (SO)^@	Assigned
Equity Tranche PTCs	2.17	2.17	40	1.76	Provisional Crisil BBB+ (SO)^@	Assigned

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
^#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
^@ 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 A+ (SO)’ rating to Series A1 Pass through certificates (PTCs) and ‘Provisional Crisil BBB+ (SO)’ rating to Equity Tranche PTCs issued by ‘Norita 2W 2024’ under a securitisation transaction originated by Manba Finance Limited, backed by a pool of 2-wheeler loan receivables.

The ratings are based on the credit support available to the PTCs, the credit quality of the underlying pool receivables, Manba’s origination and servicing capabilities, and soundness of the transaction’s legal structure.

The transaction has a ‘Par with Excess Interest Spread (EIS) with trigger-based turbo’ structure. The excess interest spread will be utilised to accelerate the principal redemption of Series A1 PTCs(till they are outstanding), if the PAR 90+ of the Pool exceeds 5.0% of the initial Pool Principal.

Series A1 PTC holders are promised timely interest on a monthly basis and principal on ultimate basis on the maturity date of the PTCs.

Investor payouts hare supported by cash collateral, over-collateralisation and subordination of excess interest spread (EIS). Manba will continue to service loan contracts in the pool as the servicing agent.

CTL has been appointed to monitor the transaction on behalf of the investors.

Key Rating Drivers & Detailed Description

Strengths:

Credit support available in the structure

External cash collateral in the structure amounting to Rs 1.76 crore (6.5% of pool principal) provides credit support to Series A1 PTCs and Equity Tranche PTCs. The PTCs also benefit from scheduled cashflow subordination (assuming zero prepayments) amounting to Rs 6.62 crore (24.4% of pool principal) for Series A1 PTCs and Rs. 4.45 crores (16.4% of pool principal) for the Equity tranche PTCs.

Seasoning profile of contracts in the pool

The pool has a weighted average seasoning of 7.6 months and pre-securitisation amortisation of 21.6%.
All of the 3,970 contracts in the underlying loan pool are current as of the cut-off date (January 05, 2025).

Weaknesses:

High risk profile of underlying asset class

The pool is backed by new two-wheeler loans, an asset class which has historically exhibited higher delinquency.

Geographical Concentration

74.0% of the pool principal comprises contracts originated from Maharashtra, with the Mumbai being the top district.

Liquidity: Strong

Liquidity is strong given that the credit enhancement (internal and external combined) in the structure is sufficient to cover losses exceeding 1.5 times the currently estimated base shortfalls

Rating Sensitivity factors

Upward Factors:

For Series A1 PTCs

Credit enhancement (based on both internal and external credit enhancements) available in the structure exceeding 1.9 times the estimated base case shortfalls on the residual cash flows of the pool.

For Equity tranche PTCs

Credit enhancement (based on both internal and external credit enhancements) available in the structure exceeding 1.5 times the estimated base case shortfalls on the residual cash flows of the pool.

Downward Factors:

For Series A1 PTCs

Credit collateral (internal and external combined) falling below 1.7 times the estimated base case loss

For Equity tranche PTCs

Credit collateral (internal and external combined) falling below 1.4 times the estimated base case loss

A sharp downgrade in the rating of the servicer/originator.

Non-adherence to the key transaction terms envisaged at the time of the rating

About the Pool

The pool cash flow is securitised and comprises receivables from new two-wheeler loans originated by Manba. The pool has a weighted average net seasoning of 7.6 months, weighted average LTV of 82.6%, weighted avg. interest rate of 20.1% and top state Maharashtra accounting for 74.0% of pool principal. Average ticket size of the pool is Rs 87,088. All contracts in the pool are current as on the cut-off date.

Rating Assumptions

To assess the base case shortfalls for the transaction, Crisil Ratings has analysed moving portfolio delinquency and collection efficiency for two-wheeler loan portfolio provided by Manba till Sept 2024. 90+dpd and 0+dpd on the portfolio are 3.6 per cent and 12.3 per cent as of Sept-24 respectively.

Crisil Ratings has also factored in pool specific characteristics and estimated the base case shortfalls in the pool by the maturity of the transaction in the range of 8.0% to 10.0% of cashflows.

Crisil Ratings has also factored the following assumptions, basis the typical industry characteristics of the asset class and its criteria for rating asset backed securitisations:

Crisil Ratings has assumed a monthly prepayment of 0.5%-1.5% in its analysis.
Based on its assessment of Manba’s short-term credit risk profile, Crisil Ratings has factored in the risk arising out of commingling of cash flows.
Crisil Ratings has run sensitivities based on various shortfall curves (front-ended, back-ended and normal) and has adequately factored the same in its analysis.
Crisil Ratings has adequately factored in the risks arising on account of counterparties.

Counterparty Details

Capacity	Counterparty Name	Counterparty Rating/ Track record	Effect on credit ratings in case of non-performance
Originator	Manba	Not rated by Crisil	No effect.
Servicer	Manba	Not rated by Crisil	Significant effect, because of change in servicing quality and replacement cost of servicer. However, currently Crisil does not envisage the need for replacement. Under certain circumstances, the trust or investor has the right to change the servicer by providing an intimation to Crisil.
Collection and Payout Account Bank	ICICI Bank	Crisil AAA/Crisil AA+/Stable	Negligible effect. Account bank can be changed without impacting the rating.
Collateral in the form of Fixed Deposit	DCB Bank	Crisil AA-/Stable/Crisil A1+	Negligible effect. Bank with whom the fixed deposit is maintained can be changed without impacting the rating.
Trustee	Catalyst Trusteeship Limited	Not rated by Crisil Ratings	Negligible effect. Can be replaced at minimal cost.

About the Originator
Manba Finance Ltd based in Mumbai, is an RBI registered NBFC which provides two-wheeler finance. The company started operations in 1996 as a DSA for ICICI Bank for two-wheeler loans till 2008, post which they started their own book. Manba is wholly owned by Mr. Manish Shah, either by himself or through group companies/relatives.

Manba has presence in five states: Maharashtra, Gujarat, Rajasthan Madhya Pradesh, and Chhattisgarh. Over the due course of operations, the company has also acquired the preferred financier tag for Suzuki, Yamaha, TVS, Piaggio and Hero MotoCorp in its operating region.

Key Financial Indicators

As On/For the Period Ended	Unit	Mar-2024	Mar-2023	Mar-2022	Mar-2021
Assets under management	Rs crore	798.8	633.7	495.8	531.1
Total income	Rs crore	191.6	133.8	107.0	108.5
Gross NPA	%	3.9%	3.7%	4.9%	2.5%
Adjusted Gearing	Times	3.75	4.3	2.9	2.8
Profit after tax	Rs crore	31.2	15.2	9.5	11.4
Return on managed assets	%	4.4%	2.7%	1.9%	2.1%

Any other information: Not Applicable

Note on complexity levels of the rated instrument:
Crisil Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

Crisil Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the Crisil Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN	Name of the security	Date of issuance	Coupon rate (%)	Maturity date*	Size of the issue (Rs.Crore)	Complexity level	Rating assigned	Cash collateral (Rs.Crore)
NA^$	Series A1 PTCs	31-Jan-25	10.80	15-Jun-28	23.85	Highly Complex	Provisional Crisil A+ (SO)	1.76^#
NA^$	Equity Tranche PTCs	31-Jan-25	NA	15-Jun-28	2.17	Highly Complex	Provisional Crisil BBB+ (SO)	1.76^{^}

$ISIN yet to be issued

*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

#For Series A1 PTCs Additional credit support includes Rs 6.62 crore in form of scheduled cash flow subordination (including EIS and over-collateralisation).

^For equity tranche PTCs Additional credit support includes Rs 4.45 crore in form of scheduled cash flow subordination (including EIS, and over-collateralisation).DCB Bank

Annexure - Rating History for last 3 Years

	Current			2025 (History)		2024		2023		2022		Start of 2022
Instrument	Type	Outstanding Amount	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating	Rating
Series A1 PTCs	LT	23.85	Provisional Crisil A+ (SO)		--		--		--		--	--
Equity Tranche PTCs	LT	2.17	Provisional Crisil BBB+ (SO)		--		--		--		--	--

All amounts are in Rs.Cr.

Criteria Details

Links to related criteria

Meaning and applicability of SO and CE symbol

CRISILs rating methodology for ABS transactions

Evaluating risks in securitisation transactions - A primer

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Rating Assumptions

Capacity

Counterparty Name

Counterparty Rating/ Track record

Effect on credit ratings in case of non-performance