Can Fin Homes : Credit Rating

June 09, 2022

Can Fin Homes Limited: Migration of the rating outstanding on the medium-term rating scale to the long-term rating scale

Summary of rating action

	Instrument*			Previous Rated Amount			Current Rated Amount			Rating Action
			(Rs. crore)			(Rs. crore)
	Term loans	11,900		11,900			[ICRA]AA+ (Stable); outstanding
	Bank facilities - Short term	2,600		2,600			[ICRA]A1+; outstanding
	Long-term/short-term fund based	500		500			[ICRA]AA+ (Stable)/ [ICRA]A1+;
				outstanding
	Short-term loan^	(500)^		(500)^			[ICRA]A1+; outstanding
	Non-convertible debenture (NCD)	3,820		3,820			[ICRA]AA+ (Stable); outstanding
	programme
	Subordinated debt programme	300		300			[ICRA]AA+ (Stable); outstanding
	Commercial paper	4,500		4,500			[ICRA]A1+; outstanding
	Fixed deposits	-		-			[ICRA]AA+ (Stable); migrated from
				MAAA (Stable)
	Total			23,620.00			23,620.00

*Instrument details are provided in Annexure-1; ^ Sub limit of Long term/ short term fund based

Rationale

In compliance with the circular [SEBI/HO/MIRSD/MIRSD_CRADT/P/CIR/2021/594] issued by the Securities and Exchange Board of India (SEBI) on July 16, 2021 and the subsequent circular SEBI/HO/MIRSD/MIRSD_CRADT /P/CIR/2022/43 of April 1, 2022, for standardizing the rating scales used by the Credit Rating Agencies, ICRA has discontinued the medium-term rating scale which was being used to assign ratings to the fixed deposit programmes of entities.

Accordingly, ICRA has migrated the rating currently outstanding for the fixed deposits programme of Can Fin Homes Limited (CFHL) from the medium-term rating scale to the long-term rating scale. The medium-term rating scale of ICRA was a 14-point scale, while the long-term rating scale is a 20-point scale. The migration of the rating has resulted in a change in the rating symbol; however, this is to be construed only as a recalibration of the rating from one scale to another, and not as a reflection of a change in the credit risk of the fixed deposit programme.

Please refer to the following link for the previous detailed rationale that captures the Key rating drivers and their description, Liquidity position, Rating sensitivities, Key financial indicators: Click here

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Analytical approach

	Analytical Approach			Comments
				ICRA Credit Rating Methodology for Non-Banking Finance Companies
	Applicable Rating Methodologies			Impact of Implicit support expected from Parent or Group on an entity's credit rating
				Migration of Ratings to the Long-Term Rating Scale from the Medium-Term Rating Scale
	Parent/Group Support			The ratings factor in ICRA's expectations that Canara Bank would be willing to extend
			support to CFHL, if needed, given its importance as well as the shared brand name.
	Consolidation/Standalone			The ratings are based on the standalone financial statements of the company.

About the company

CFHL - promoted by Canara Bank, HDFC Limited and UTI in 1987 - is a deposit-taking HFC registered with NHB. Headquartered in Bengaluru, the company has a presence in 21 states and Union Territories. CFHL reported a loan book of Rs. 26,711 crore as on March 31, 2022. It primarily operates in the affordable housing category. The average ticket size of the loans is less than Rs. 25 lakh with a median tenure of 16 to 20 years and a fixed obligation to income ratio (FOIR) of less than 50%.

CFHL reported a net profit (profit after tax; PAT) of Rs. 471 crore in FY2022 on a loan book of Rs. 26,711 crore as on March 31, 2022 against a PAT of Rs. 456 crore in FY2021 on a loan book of Rs. 22,105 crore as on March 31, 2021.

Status of non-cooperation with previous CRA: Not applicable

Any other information:

ICRA has taken note of the reporting of fraud of Rs. 3.93 crore by CFHL, which came to light after an inspection conducted by Canara Bank (sponsor bank of CFHL) following a whistle blower complaint to the National Housing Bank (NHB). The quantum of reported fraud amount is negligible in comparison to CFHL's overall loan book, however, ICRA shall continue to monitor further developments, if any, which could adversely impact its credit profile.

Rating history for past three years

Current Rating (FY2022)

Chronology of Rating History

for the Past 3 Years

Date &

Date & Rating in

Date & Rating in FY2020

Instrument

Rating in

Date & Rating in FY2022

Amount

Amount

FY2021

Type

Rated

Outstanding

FY2023

(Rs. crore)

(Rs. crore)

Jun-09-

Mar-15-

Nov-18-

Aug-20-

Nov-20-

Oct-22-

Sep-27-2019

May-6-2019

2022

2022

2021

2021

2020

2020

1

Term loans

Long

11,900

7,193.64

[ICRA]AA+

[ICRA]AA+

[ICRA]AA

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

term

(Stable)

(Stable)

+ (Stable)

(Stable)

(Stable)

&

&

(Stable)

2

Bank lines - ST

Short

2,600^

2,600^

[ICRA]A1+

[ICRA]A1+

[ICRA]A1

[ICRA]A1+

[ICRA]A1+

[ICRA]A1+

[ICRA]A1+

[ICRA]A1+

term

+

Long-term/

Long

[ICRA]AA+

[ICRA]AA+

term/

3

short-term

500

500^

(Stable)/

(Stable)/

short

fund based

[ICRA] A1+

[ICRA] A1+

term

4

Short-term

Short

(500)

(500)^

[ICRA]A1+

[ICRA]A1+

loan

term

5

Sub-debt

Long

300

100

[ICRA]AA+

[ICRA]AA+

[ICRA]AA

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

term

(Stable)

(Stable)

+ (Stable)

(Stable)

(Stable)

&

&

(Stable)

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Current Rating (FY2022)

Chronology of Rating History

for the Past 3 Years

Date &

Date & Rating in

Date & Rating in FY2020

Instrument

Rating in

Date & Rating in FY2022

Amount

Amount

FY2021

Type

Rated

Outstanding

FY2023

(Rs. crore)

(Rs. crore)

Jun-09-

Mar-15-

Nov-18-

Aug-20-

Nov-20-

Oct-22-

Sep-27-2019

May-6-2019

2022

2022

2021

2021

2020

2020

6

NCD

Long

3,820

722

[ICRA]AA+

[ICRA]AA+

[ICRA]AA

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

[ICRA]AA+

term

(Stable)

(Stable)

+ (Stable)

(Stable)

(Stable)

&

&

(Stable)

7

Commercial

Short

4,500

3,400*

[ICRA]A1+

[ICRA]A1+

[ICRA]A1

[ICRA]A1+

[ICRA]A1+

[ICRA]A1+

[ICRA]A1+

[ICRA]A1+

papers

term

+

8

Fixed deposits

Long

-

-

[ICRA]AA+

MAAA

MAAA

MAAA

MAAA

MAAA &

MAAA &

MAAA

term

(Stable)

(Stable)

(Stable)

(Stable)

(Stable)

(Stable)

• - Rating under Watch with Developing Implications; ^ Reflects sanctioned amount *CP amount outstanding on December 31, 2021

Complexity level of the rated instrument

	Instrument			Complexity Indicator
	Term loans		Simple
	ST - Bank facilities		Simple
	Long-term/short-term fund based		Simple
	Short-term fund based		Simple
	NCD programme		Simple
	Subordinated debt programme		Simple
	Commercial paper		Very Simple
	Fixed deposits		Very Simple

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analyzing an entity's financial, business, industry risks or complexity related to the structural, transactional, or legal aspects. Details on the complexity levels of the instruments, is available on ICRA's website: www.icra.in

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Annexure-1: Instrument details

Date of

Maturity

Amount (Rs.

ISIN

Instrument

sanction/

Coupon Rate

Rating

Date

crore)

issuance

NA

TL 1

Aug-21-17

6.70%

10 years

750.00

[ICRA] AA+(Stable)

NA

TL 2

Apr-12-16

6.14%

10 years

336.81

[ICRA] AA+(Stable)

NA

TL 3

Apr-23-18

6.30%

10 years

725.00

[ICRA] AA+(Stable)

NA

TL 4

Dec-31-18

6.09%

10 years

674.99

[ICRA] AA+(Stable)

NA

Sep-13-19

6.14% &

10 years

775.00

[ICRA] AA+(Stable)

TL 5

6.65%

NA

TL 6

Mar-09-21

6.65%

10 years

461.57

[ICRA] AA+(Stable)

NA

TL 7

Jan-21-22

NA

10 years

125.00

[ICRA] AA+(Stable)

NA

TL 8

Jan-20-18

5.65%

7 years

128.57

[ICRA] AA+(Stable)

NA

TL 9

May-16-18

4.46%

7 years

118.39

[ICRA] AA+(Stable)

NA

TL 10

Mar-22-19

5.50%

6 Years

250.00

[ICRA] AA+(Stable)

NA

TL 11

Nov-29-19

5.5% & 5.25%

6 Years

744.86

[ICRA] AA+(Stable)

NA

Jul-27-20

5.70% &

4 years

[ICRA] AA+(Stable)

TL 12

5.75%

628.56

NA

TL 13

Jan-12-21

NA

5 years

608.68

[ICRA] AA+(Stable)

NA

TL 14

Feb-08-18

5.99%

7 years

107.12

[ICRA] AA+(Stable)

NA

TL 15

Feb-08-18

5.99%

7 years

107.12

[ICRA] AA+(Stable)

NA

TL 16

Jun-11-19

5.99%

7 years

151.77

[ICRA] AA+(Stable)

NA

TL 17

Jul-20-19

5.99%

7 years

54.63

[ICRA] AA+(Stable)

NA

TL 18

Dec-27-19

5.99%

7 years

71.42

[ICRA] AA+(Stable)

NA

TL 19

Sep-21-20

5.99%

7 years

205.35

[ICRA] AA+(Stable)

NA

TL 20

Sep-19-20

5.55%

3 years

813.33

[ICRA] AA+(Stable)

NA

TL 21

Sep-19-20

5.55%

10 years

5.00

[ICRA] AA+(Stable)

NA

TL 22

Feb-10-22

NA

9.75 years

125.00

[ICRA] AA+(Stable)

NA

Unallocated

3,931.87

[ICRA] AA+(Stable)

NA

CC/WCDL - 1

Dec-2021

MCLR + 5 bps

1 year

500

[ICRA]AA+ (Stable)/

[ICRA] A1+

NA

(STL - 1)

Dec-2021

MCLR + 5 bps

1 year

(500)1

[ICRA] A1+

NA

STL - 2

Nov-2021

To be decided

1 year

1,000

[ICRA] A1+

at availment

NA

OD /WCDL - 3

Aug-29-2018

6.90%, 6.20%

NA

1,000.00

[ICRA]A1+

NA

OD - 4

NA

7.05%

NA

100.00

[ICRA]A1+

NA

STL - 5

Mar-5-2021

6.00%

Mar-4-362

500.00

[ICRA]A1+

INE477A07217

NCD

Nov-15-2016

7.77%

Nov-15-2021

122

[ICRA]AA+ (Stable)

INE477A07241

NCD

May-18-

7.89%

May-18-2022

600

[ICRA]AA+ (Stable)

2017

Unallocated

NCD

NA

NA

NA

3,098

[ICRA]AA+ (Stable)

INE477A08025

Sub-debt

Mar-12-2014

8.94%

Mar-12-2024

100

[ICRA]AA+ (Stable)

Unallocated

Sub-debt

NA

NA

NA

200

[ICRA]AA+ (Stable)

1. Sub-limitof CC/WCDL
2. Payable within 1 year from date of disbursement

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