By Harshal Patkar

India Ratings and Research (Ind-Ra) has placed Can Fin Homes Limited’s (CFHL) Long-Term Issuer Rating of ‘IND AAA’ on Rating Watch Negative (RWN). The Outlook was Stable. The instrument-wise rating actions are given below:

Instrument Type

Date of Issuance

Coupon Rate (%)

Maturity Date

Size of Issue (billion)

Rating/Rating Watch

Rating Action

Commercial paper

-

-

7-365 days

INR45

IND A1+/RWN

Placed on RWN

Subordinated debt*

-

-

-

INR3

IND AAA/RWN

Placed on RWN

Non-convertible debentures (NCDs)*

-

-

-

INR80

IND AAA/RWN

Placed on RWN

* Details are given in Annexure

KEY RATING DRIVERS

The RWN follows the appointment of investment bankers by Canara Bank (Canara; ‘IND AAA’/Stable) for a stake sale (in part or full) in its subsidiaries/associates, including CHFL, in accordance with the directions of the Department of Financial Services, Ministry of Finance, the government of India. The aim is to shore up the bank’s core capitalisation.

The RWN reflects Ind-Ra’s view that CHFL could no longer be considered core to the bank’s scheme of things, as the bank has shown a shift in its strategy towards CHFL with the likely stake sale. Canara held a 30% equity stake in CHFL as of September 2017. CHFL is an important vehicle for Canara in the housing finance segment, which is a key priority segment for the government of India.

Ind-Ra will resolve the rating watch once it attains further clarity on the impact of the said transaction on the factors such as shareholding structure, management control, board representation, branding and inherent credit profile, and will undertake an appropriate rating action.


COMPANY PROFILE

CFHL is a housing finance company started in 1987 by Canara in association with Housing Development and Finance Corporation and Unit Trust of India. The company caters primarily to salaried borrowers in urban areas and 74% of its advances are sourced from the four southern states. At end-September 2017, CFHL had a loan book of INR145 billion and a network of 132 branches, 33 satellite offices and 12 affordable housing centres.

FINANCIAL SUMMARY

Particulars

1HFY18

1HFY17

Total assets (INR million)

145,750

120,820

Total equity (INR million)

11,905

9,643

Net profit (INR million)

1,462

1,048

Return on average assets (%) *

2.12

1.87

Equity/assets (%)

8.2

8.0

Source: CFHL, * Annualised


RATING HISTORY

Instrument Type

Current Rating/Rating Watch

Historical Rating/Outlook

Rating Type

Rated Limits (billion)

Rating

10 October 2017

3 August 2016

7 October 2014

Issuer rating

Long-term

-

IND AAA/RWN

IND AAA/Stable

IND AAA/Stable

IND AAA/Stable

NCDs

Long-term

INR80

IND AAA/RWN

IND AAA/Stable

IND AAA/Stable

IND AAA

Subordinated debt

Long-term

INR3

IND AAA/RWN

IND AAA/Stable

IND AAA/Stable

IND AAA

Commercial paper

Short-term

INR45

IND A1+/RWN

IND A1+

-

-

ANNEXURE


Instrument

ISIN

Date of Issuance

Coupon Rate (%)

Maturity Date

Size of Issue (billion)

Rating/Rating Watch

NCDs

INE477A07050

6 February 2015

8.80

6 February 2018

INR2

IND AAA/RWN

NCDs

INE477A07068

28 April 2015

8.69

28 April 2018

INR2

IND AAA/RWN

NCDs

INE477A07076

28 May 2015

8.70

28 June 2018

INR1

IND AAA/RWN

NCDs

INE477A07084

2 July 2015

8.80

2 July 2018

INR2

IND AAA/RWN

NCDs

INE477A07092

7 August 2015

8.71

7 August 2018

INR2

IND AAA/RWN

NCDs

INE477A07118

8 October 2015

8.44

8 October 2018

INR1

IND AAA/RWN

NCDs

INE477A07126

30 October 2015

8.41

30 January 2019

INR1.5

IND AAA/RWN

NCDs

INE477A07134

24 November 2015

8.45

22 February 2019

INR1

IND AAA/RWN

NCDs

INE477A07142

22 December 2015

8.55

22 March 2019

INR1

IND AAA/RWN

NCDs

INE477A07159

7 January 2016

8.60

6 April 2019

INR1.25

IND AAA/RWN

NCDs

INE477A07167

17 February 2016

8.85

17 May 2019

INR1.65

IND AAA/RWN

NCDs

INE477A07100

10 September 2015

8.69

10 September 2020

INR1

IND AAA/RWN

NCDs

INE477A07175

22 April 2016

8.37

22 March 2019

INR3

IND AAA/RWN

NCDs

INE477A07183

27 May 2016

8.55

27 August 2019

INR1

IND AAA/RWN

NCDs

INE477A07191

16 September 2016

7.85

16 December 2019

INR3

IND AAA/RWN

NCDs

INE477A07209

24 October 2016

7.73

24 January 2020

INR4.4

IND AAA/RWN

NCDs

INE477A07217

15 November 2016

7.77

15 November 2021

INR1.22

IND AAA/RWN

NCDs

INE477A07225

12 January 2017

7.57

12 April 2020

INR4

IND AAA/RWN

NCDs

INE477A07233

27 February 2017

7.68

27 May 2020

INR2

IND AAA/RWN

NCDs

INE477A07241

18 May 2017

7.89%

18 May 2022

INR6

IND AAA/RWN

NCDs**

INE477A08025

3 December 2014

8.94

3 December 2024

INR1

IND AAA/RWN

NCDs

INE477A07258

26 July 2017

7.32

26 October 2020

INR4

IND AAA/RWN

Total

 

Utilised

 

 

INR47.02

 

 

 

Unutilised ^

-

-

INR35.98

 

 

 

Grand Total

 

 

INR83.0

 


** Sub-debt

^Sub-limit for sub-debt of INR2 billion


COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity levels of the instruments, please visit https://www.indiaratings.co.in/complexity indicators.

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies, structured finance and project finance companies. 

Headquartered in Mumbai, Ind-Ra has seven branch offices located in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata and Pune. Ind-Ra is recognised by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank. 

Ind-Ra is a 100% owned subsidiary of the Fitch Group.

For more information, visit www.indiaratings.co.in.

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Analyst Names

  • Primary Analyst

    Harshal Patkar

    Senior Analyst
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th floor, West Wing Plot C-2, G Block. Bandra Kurla Complex Bandra (East), Mumbai 400051
    +91 22 40001722

    Media Relation

    Mihir Mukherjee

    Manager Corporate Communications and Investor Relations
    +91 22 40356121