Detailed Rationale

Crisil Ratings has assigned its ‘Crisil BBB+/Stable’ rating to Rs 50 crore non-convertible debentures (NCDs) of Indel Money Limited (Indel Money). The rating on the other non convertible debentures and bank loan facilities have been reaffirmed at ‘Crisil BBB+/Stable’.

 

The ratings continue to factor the extensive experience of the promoters and top management in the gold financing business, adequate capitalisation supported by regular infusions, and sound asset quality. These strengths are partially offset by the average, though improving, earnings and geographical concentration in operations.

 

Steady growth in portfolio resulted in 31% (YTD) growth in assets under management (AUM) to Rs 2,009 crore as of December 2024 from Rs 1,534 crore as of March 2024. The scale-up in portfolio is also visible in AUM per branch increasing to Rs 5.7 crore as on January 31, 2025, from Rs 5.36 crore as on March 31, 2024, and Rs 4.6 crore as on March 31, 2023. Moreover, strong portfolio quality is reflected in 90+dpd (days past due) of 2.2% as on December 31, 2024, as against 0.5% as on March 31, 2024, and 1.6% as on March 31, 2023. The company benefits from having over 93% of its portfolio in the gold loan segment wherein the asset quality is manageable due to the liquid nature of the underlying asset. Nevertheless, with expansion of the portfolio into newer geographies, the ability to replicate strong checks on systems and processes will remain monitorable.

 

Despite being operational for over 12 years, the substantial improvement in profitability is only visible in the last 4-6 quarters. During the first nine months of fiscal 2025, return on managed assets (RoMA) stood at 1.5% (annualised). However, profitability has been impacted during recent quarters due to the yield pressure. The average RoMA has been 1.9-2.4% during the last two fiscals. Expansion into new states in the last few years led to high operating costs of 5.5-6.0% in the first nine months of fiscal 2025, however, operational efficiency in portfolio (growth from both new and old branches) has been improving since the last 3-4 quarters. Nevertheless, with further ramp-up in operations, the ability to maintain profitability will remain monitorable

 

On April 9, 2025, the Reserve Bank of India (RBI) released draft directions on loans against gold jewellery. These draft directions propose to have a harmonised regulatory framework for such loans applicable across various regulated entities. The draft directions also propose to address the concerns observed relating to some of the lending practices being followed and provide necessary clarity on certain aspects. Further, these directions also focus on enhancing transparency and protecting consumers by standardising procedures across entities. Nevertheless, given the directions are at draft stage, any impact on the credit profile of entities (including Indel Money) will remain a key monitorable.

Analytical Approach

Crisil Ratings has considered the standalone business and financial risk profiles of Indel Money

Key Rating Drivers & Detailed Description

Strengths:

Experienced promoters and management team

The extensive experience of the promoters and senior management team, with the addition of independent directors, should continue to support the business. Mr Mohanan Gopalakrishnan (chairman and managing director) is a banking professional with more than 38 years of experience in the Gulf Cooperation Council. He was also the head of trade finance operations of the United Arab Bank for 11 years commencing from 2001. Mr Umesh Mohanan (executive director and CEO) managed a Middle Eastern conglomerate, spearheading its global operations for 12 years till 2016. Apart from the promoter directors, the board members of the company consist of prominent independent directors such as Mr N S Venkatesh (CEO of Association of Mutual Funds in India), Mr C R Sasikumar (former deputy managing director State Bank of India) and Mr S Ganesh (former principal chief general manager of RBI.

 

Adequate capitalisation supported by regular capital infusion

Capitalisation has remained adequate for the current and expected scale of operations. Networth increased to Rs 289 crore as on December 31, 2024, from Rs 211 crore as on March 31, 2024, and Rs 163 crore as on March 31, 2023, while gearing improved to 3.7 times from 4.3 times, and 4.9 times. This was driven by healthy cash accrual as well as capital infusion of Rs 10 crore by the promoters in fiscal 2024. The promoters have infused Rs 53 crore till date in fiscal 2025 in addition to the issuance of bonus shares of Rs 37 crore. Capital position is also expected to benefit from steady accretion to reserve and sustained improvement in profitability. Nevertheless, with ramp-up in operations, gearing may remain weak around 6 times on a steady-state basis over the medium term. Any deterioration in gearing beyond the committed threshold will be a key rating sensitivity factor.

 

Sound asset quality in the gold loan segment

The company monitors the portfolio monthly on a mark-to-market basis and focuses on interest collection and reduction of the risk portfolio. Asset quality for gold loans, as better measured by credit costs, has been sound with the ultimate credit costs remaining low at only 0.3% (annualised) during the first nine months of fiscal 2025 against 1.9% in fiscal 2024. 90+dpd (days past due) was around 2.2% as on December 31, 2024 (0.5% as on March 31, 2024), against 1.6% as on March 31, 2023. However, the company underwent a revision in non-performing asset (NPA) recognition policy from the fourth quarter of fiscal 2024 (post regulatory observation). The company, earlier, was recognising NPAs on account-wise basis and this was revised to customer/borrower-wise from the fourth quarter of fiscal 2024. Owing to this revision, the overall gross NPAs of the company went up to 5% as on March 31, 2024, and 4.4% as on December 31, 2024. Further, given the company has majority portfolio towards gold loans, gross NPAs in this segment stood at 3.7% as on March 31, 2024, and 1.4% as on June 30, 2024. However, its non-gold loan portfolio (small and medium enterprise [SME] portfolio (8% of AUM)) saw a larger impact with gross NPAs in this segment elevating to 39.8% as on June 30, 2024 (14.9% as on March 31, 2024). The increase has also been partially due to de-growth in this non-gold loan portfolio. The company, however, has made provisioning of Rs 10 crore (45%) during fiscal 2024 and Rs 15 crore during the first quarter of fiscal 2025 (total provisioning of around 31% as of June 2024), to cover these NPAs. 

 

Nevertheless, as far as gold loans are concerned, the ultimate credit costs are expected to remain low on account of low asset-side risk (security of gold, which is liquid and is in the lender’s possession) in the gold finance business. However, the ability of the company to improve on its asset quality within non-gold loan (SME) segment will remain key monitorable

 

Weakness:

Average, though improving, earnings profile

Indel Money started reporting profits only from fiscal 2017 and had modest return on assets (RoA) of 0.3-0.8% over the four fiscals through 2020. While the company scaled up operations substantially, earnings (in terms of both absolute profits and RoA) are lower than those of large gold loan financiers. Profitability was affected by high operating expenses as expansion in the gold finance segment in the past three fiscals led to high expenses (mainly for setting up branches).

 

Nevertheless, with improvement in scale, profitability also increased steadily leading to average return on managed assets (RoMA) of ~2.1% during the two fiscals through 2024. The company reported a profit after tax (PAT) of Rs 39.9 crore and RoMA of 2.4% in fiscal 2024, against Rs 23 crore and 1.9%, respectively, during fiscal 2023. However, during the first nine months of fiscal 2025, profitability has been constrained owing to yield pressure with the company reporting a PAT of Rs 25 crore translating into RoMA of 1.5% (annualised) for the period.

 

Operating expenses have remained in the range of 5.3% to 6.0% during the last two fiscals. With improvement in scale (primarily in newer branches), operating expenses are expected to come down over the medium term. As the portfolio scales up, the ability to raise resources at competitive costs will be key for further improvement in the earnings profile. Additionally, management of timely auctions, and therefore, credit costs will be a key determinant of profitability over the medium term.

 

Geographical concentration in operations

The company had 357 branches as on December 31, 2024 (286 branches as on March 31, 2024), with operations concentrated in Karnataka (24%), followed by Tamil Nadu (21%), Andhra Pradesh and Telangana (16%), Odisha (18%), Maharashtra (8%), Madhya Pradesh (3%) and Kerala (2%). Indel Money has diversified operations in Andaman and Nicobar, Delhi, Haryana, Uttar Pradesh and Gujarat during fiscal 2025. Further, it plans to expand in West Bengal and Rajasthan.

Liquidity: Adequate

As per the asset liability maturity profile, there are no negative cumulative mismatches up to one year as on September 30, 2023. The company has a policy of maintaining a liquidity cover of 1 time for debt obligation arising over the upcoming month, in addition to the sanctions under pipeline. Overall free liquidity stood at Rs 90 crore as on March 15, 2025, in the form of cash and equivalents and CC/WCDL limit of Rs 22 crore. Indel Money has maintained several investments through a holding company, Indel Corporation Pvt Ltd. The promoters have articulated that some of these investments can be liquidated (if needed) or funds can be generated via dividends. Additionally, in their personal capacity, the promoters hold overseas investments that can be liquidated in case Indel Money requires any fund. Average monthly collection stood at around Rs 390 crore (including prepayments) between April 2024 and March 2025. The company also has the option to lower disbursements to manage repayments. As a policy, the promoters review liquidity and debt repayment on a weekly basis and accordingly decide on incremental disbursements

Outlook: Stable

Indel Money will continue to benefit from the extensive experience of its management and its adequate capitalisation and sound asset quality

Rating Sensitivity Factors

Upward factors

• Ramp-up in operations with decline in regional concentration
• Significant increase in absolute earnings with RoMA improving to over 3% on a steady-state basis
• Ability to enhance funding mix with higher proportion of bank funding along with reduction in cost of borrowing
• Improvement in capital position with gearing remaining below 5 times 

 

Downward factors

• Deterioration in profitability, with RoMA remaining below 1.5%
• Weakening of asset quality metrics or increase in credit costs

About the Company

Indel Money, a non-deposit-taking NBFC, was incorporated in 1986 as Payal Holdings Pvt Ltd. It was acquired by the current promoters in July 2012 and got its current name in January 2013. Indel Money primarily extends loans against gold jewellery. It also operates in the traders’ loans, business loans, loans against property, vehicle loans, and money transfer segments. Indel Corporation Ltd, the holding company, is promoted by Mr Mohanan Gopalakrishnan and Mr Umesh Mohanan. It operates in the hospitality, and media and communication segments through various companies.

Key Financial Indicators

Particulars March 31	Unit	December 2024/ 9M Fiscal 25	2024	2023	2022	2021
Total assets	Rs crore	1508.5	1244.9	1013.9	736.8	502.2
Total income	Rs crore	226.2	291.1	187.3	123.0	94.7
PAT	Rs crore	25.3	39.9	20.5	2.1	8.7
90+ dpd	%	2.2	0.47	1.56	1.03	0.20
Gearing	Times	3.7	4.3	4.9	5.5	4.1
RoMA	%	1.5*	2.4	1.9	0.3	1.7

*annualised

Any other information: Not Applicable