ICRA has assigned a rating of 'AA (stable)/ A1+' to Rs 12 billion bank lines of Aditya Birla Finance. ICRA also has outstanding ratings of AA (stable)/ A1+ rating for the bank lines of Rs 56.90 billion, A1+ for the short term debt programme of Rs 40 billion, AA (stable) for the Rs 40 billion long term debt programme and AA (stable) for the Rs 2.50 billion subordinate-debt programme of ABFL.
Aditya Birla Finance is a 100% subsidiary of Aditya Birla Nuvo.
The ratings factor in the strong parentage of Aditya Birla Nuvo (ABNL) (rated AA+ (stable)/ A1+) and ABFL's strategic importance for the Aditya Birla Group, by virtue of being the sole entity undertaking lending activities. The ratings also factor in ABFL's improved capitalization and leverage, strong risk management systems and management expertise, in addition to the financial flexibility enjoyed by the company by virtue of its association with the Aditya Birla Group.
ICRA has noted the increased diversification in the company's lending book and the comfortable asset quality as on date. Nevertheless, the long-term rating is constrained by the short track record of the company in the longer tenure Project & Structured Finance and Mortgage loans. The ability of ABFL to continue to profitably scale up the book while continuing to maintain asset quality will remain a key rating sensitivity.
ABFL currently operates under four verticals viz., Corporate Finance Group (syndication of loans, bill discounting / factoring activities and distribution of financial products), Capital Market Group (promoter funding, loan against shares (LAS) and margin funding), Mortgages and Project & Structured finance. The loan book of the company stood at Rs 101.59 billion as on Dec. 31, 2013. Capital Market Finance contributed ~31%, Corporate Finance ~21%, Project and Structured finance ~ 24% and Mortgages contributed ~24% as on Dec. 31, 2013.
Shares of the company declined Rs 6.2, or 0.56%, to trade at Rs 1,099. The total volume of shares traded was 6,922 at the BSE (2.12 p.m., Thursday).
