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CRISIL Ratings has upgraded its ratings on the long-term debt facilities of Muthoot Finance to ‘CRISIL AA+/Stable’ from ‘CRISIL AA/Positive’.
CRISIL Ratings, in its rating rationale, has stated: “The upgrade is driven by Muthoot Finance’s demonstrated ability to profitably scale up its core gold loan business while maintaining its strong financial risk profile.” It added that an “established track record and brand name in gold financing industry, strong capitalisation and profitability among the best in the industry, which is expected to remain healthy, are the strengths of Muthoot Finance Ltd.”
The AA+ rating is just one level below ‘AAA’ rating, which is the highest rating for long-term debt instruments. Instruments with this rating are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.
The rating upgrade will enable the company to raise more long-term debt funds as well as attract a wider set of investors. It can further attract investments from retail investors in the public issue of non-convertible debentures (NCDs) in which the company has a track record of 24 issuances raising ₹17,392 crore cumulatively. Moreover, the company will be able to raise funds at much more competitive rates.
George Alexander Muthoot, Managing Director, said: “This is another golden feather in the cap for Muthoot Finance, and it is a recognition of its leading and long-sustained track record in gold loan business. With this rating upgrade, Muthoot Finance has become one of the few NBFCs that has achieved this rating level on a standalone basis without any parental support factored in rating.”
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