The rating agency CRISIL, a Standard & Poor’s company, has upgraded the long-term rating of Indiabulls Housing Finance Limited (IBHFL), and its wholly-owned subsidiary Indiabulls Commercial Credit Limited (ICCL), to the highest rating of [CRISIL] AAA/ Stable, from its earlier assigned rating of [CRISIL] AA+/Positive.
IBHFL is only the second private non-bank lender on standalone strength to be rated AAA by CRISIL. In upgrading the rating, CRISIL has factored IBHFL’s continued healthy asset quality, robust capitalization, strong profitability, healthy cover for asset-side risks, and sufficient liquidity.
Further, CRISIL has noted that IBHFL is one of the largest and most profitable non-bank lenders in India.
With this rating upgrade all of the four leading rating agencies in India rate IBHFL at the highest long-term rating of AAA and the highest short-term rating of A1+.
This outcome is positive for Indiabulls housing finance, as it would now be able to source its funds at a cheaper cost and make its product completive over its competitors which may also help it to improve its market share in housing finance sector.
We believe the company’s focus on core mortgage loans and market share gains should drive AUM growth of 25%+ over the next three years. IHFL is among the lowest-levered HFCs. We expect its asset quality trend is likely to remain stable going ahead. The stock is trading at ~3x FY19E P/BV. We have the positive outlook on the stock.
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