India Ratings and Research (Ind-Ra) has assigned Bajaj Finance (BFL) a long-term issuer rating of 'IND AAA' rating with stable outlook. The agency has also assigned BFL's Rs 20 billion long-term non-convertible debenture and Rs 5 billion unsecured subordinated debt an ‘IND AAA’ rating with stable outlook.

BFL's ratings are driven by Ind-Ra's expectation of support from its ultimate parent, Bajaj Holdings & Investment (BHIL). BHIL holds 39.2% equity in Bajaj Finserv (BFS - which holds 57.5% equity in BFL) and 31.5% equity in Bajaj Auto (BAL). This is based on BFL’s role as a captive financier for BAL.

The ratings also derive comfort from BAL’s robust business profile, which is the primary source of dividend for BHIL. The group has very strong liquidity in cash and liquid investments to provide funding support to BFL in a contingency and is committed to inject capital in BFL whenever required. This, along with the short-term liquidity that can be generated, accounted for over 50% of BFL’s total debt at end-March 2015 and is an extraordinary buffer for BFL’s creditors.  

BFL targets the loan book to grow at a CAGR of 25% over FY15-FY19 to reach Rs 800 billion which we believe is achievable based on BFL's strong market positioning in consumer loans and established network of branches and dealer locations.