| GIC Housing Finance Limited | ||||
| Rated amount enhanced for Bank Debt | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on the bank facilities and debt instruments of GIC Housing Finance Limited (GIC HF).
The ratings continue to reflect the strong support expected from GIC HF’s promoter and largest shareholder, General Insurance Corporation of India Re (GIC Re); and the company’s adequate capitalisation. These strengths are partially offset by modest asset quality and a moderate, albeit improving, scale of operations.
Collection efficiency for six months ending September 2022 improved to 96.9% from 92.8% for six months ended September 2021. Collections will continue to remain a monitorable, as income streams of the borrowers have been impacted in the current challenging macro environment. |
Analytical Approach CRISIL Ratings assesses the standalone credit risk profile of GIC HF and continues to factor in the strong support from the parent, considering the strategic importance of the entity, largest shareholding, shared management, and high moral obligation of the parent on account of shared name and brand. |
Key Rating Drivers & Detailed Description Strengths: Expectation of strong support from the promoter and largest shareholder, GIC Re GIC Re and its erstwhile subsidiaries — National Insurance Co Ltd, The New India Assurance Co Ltd, The Oriental Insurance Co Ltd, and United India Insurance Co Ltd — together hold 42.41% equity stake in GIC HF as on September 30, 2022. While GIC Re is the largest shareholder with 15.26% stake, all the promoter companies act in concert with GIC Re for decision-making. GIC HF also derives management, operational, and financial support from GIC Re. Furthermore, the name sharing strengthens GIC Re's moral obligation to support the housing finance entity. Additionally, GIC Re has provided a written commitment ensuring that GIC HF will honour all its financial obligations in a timely manner.
Adequate capitalisation The company had a sizeable networth of Rs 1,647 crore and tier-I capital adequacy ratio of 26.24% as on December 31, 2022 (Rs 1,511 crore and 25.71% as on March 31, 2022). While capital cushion to manage the asset-side risk reduced, it remains adequate with networth to net non-performing asset (NPA) ratio of 3.91 times as on December 31, 2022 (3.1 times as on March 31, 2022). Capitalisation is expected to remain stable over the medium term.
Weaknesses: Modest asset quality Asset quality metrics have witnessed a significant reduction in GNPAs and was at 6.89% as on December 31, 2022 as compared to 7.35% as on March 31, 2022. Of the entire portfolio, loans against property (LAP) book also continued to witness relatively higher delinquencies. One-time restructuring has been relatively low at 0.4% of the loan book.
Around four years ago, the company revamped its systems and process to improve its asset quality. CRISIL understands that the current NPAs have been primarily from the portfolio originated prior to fiscal 2019 and recent originations have negligible delinquencies. Further, over the last couple of years, the company has shifted its focus towards home loans, particularly towards salaried customers. Hence, the proportion of non-salaried customers is likely to decline over the medium term.
However, the company’s ability to arrest slippages and manage further credit costs, particularly given the challenging environment, remains a key monitorable, as does its ability to recover from NPAs.
Moderate, albeit improving, scale of operations The company remains a relatively small player in the Indian housing finance industry with around 1% market share. Nevertheless, loan book has grown steadily at a 5-year compound annual growth rate of 20% till March 31, 2022 and stood at Rs 10,518 crore as on December 31, 2022 (Rs 11,205 crore as on March 31, 2022 net of provision). Although the loan book is concentrated in Maharashtra, the company is consciously growing its book outside the state (particularly Hyderabad, Bengaluru, and Gurgaon) to achieve better geographical diversification. Consequently, proportion of book in Maharashtra reduced to 36% as on March 31, 2022, from 50% in fiscal 2018. |
Liquidity: Strong Given the longer tenure on asset side, the asset and liability management (ALM) profile as on January 31, 2022, had positive cumulative mismatches in upto one year bucket, excluding sanctioned but unutilised bank lines Liquidity position remains adequate supported by adequate unutilised bank lines. The company had unutilised bank lines of Rs 1605 crore as on January 31, 2022, compared to debt repayment of Rs 1438 crore (including Rs 350 crore in CP) till May 2023. The company also benefits from GIC Re’s support. |
Outlook: Stable CRISIL Ratings believes GIC Re will continue to support GIC HF, and the latter will maintain adequate capitalisation over the medium term. |
Rating Sensitivity Factors Upward Factors:
Downward Factors:
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About the Company GIC HF was founded in 1989 by GIC Re and its erstwhile subsidiaries, National Insurance Co Ltd, The New India Assurance Co Ltd, The Oriental Insurance Co Ltd, and United India Insurance Co Ltd, together with Unit Trust of India (UTI), Industrial Credit and Investment Corporation of India (ICICI), Industrial Finance Corporation of India (IFCI), Housing Development Finance Corporation (HDFC) and State Bank of India (SBI), all of which contributed to the initial share capital. Later on HDFC, SBI, ICICI, UTI, and IFCI sold their holding in GIC HF and ceased to be promoters. As on December 31, 2020, the promoter group held a 42.41% stake in the company, with GIC Re being the largest shareholder.
GIC HF provides individual housing loans to the middle to low income group in Tier-II and Tier-III cities. The portfolio mix consisted of 91% housing loans and 9% LAP, while the borrower profile comprised of 77% salaried customers and 23% non-salaried customers, as on September 30, 2022. The company had a network of 75 branches as on September 30, 2022, most of which were concentrated in Maharashtra.
Profit after tax (PAT) was Rs 161 crore on total income of Rs 841 crore for nine month ending December 31, 2022, against Rs 174 crore and Rs 1156 crore, respectively, in fiscal 2022. |
Key Financial Indicators
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Yet to be issued |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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This Annexure has been updated on 07-Feb-2023 in line with the lender-wise facility details as on 07-Feb-2023 received from the rated entity.
Criteria Details
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