Rating Rationale
August 01, 2017 | Mumbai
CRISIL 'BQ 1' assigned to Indiabulls Ventures Limited
 
CRISIL has assigned its 'BQ 1' broker grading to Indiabulls Ventures Ltd (IVL). The broker grading, which has a one-year validity, indicates CRISIL's opinion on the quality of operations and services provided by the stock broker. Brokers are graded on a five-point scale ranging from BQ~1-BQ~5, with 'BQ~1' being the highest.
 
The grading reflects IVL's strong risk management systems, robust system framework, adequate compliance track record, and healthy credit risk profile. External interface (research and information services) is, however, limited compared to those provided by peers.
Key Rating Drivers & Detailed Description
Strengths
* Strong risk management systems
IVL has demonstrated its ability to manage risks inherent in the broking business. It was one of the first brokers in India to provide customers with comprehensive internet-based trading software. It also has standardised processes and procedures and strong internal control systems that are vital for managing a retail broking business. Client accounts are monitored centrally using a software developed in-house, which can generate detailed ledgers and track margin levels dynamically. Risk management framework includes an established policy for selecting and monitoring customers and a well-defined business continuity plan.
 
* Adequate compliance track record
The company follows strict margin norms and maintains a pre-approved list of securities that can be accepted as margin. It applies appropriate haircuts on underlying stocks for computing trading limits for clients. IVL also has a stringent policy for automated square-offs of client exposures in case of margin shortfalls.
 
* Comfortable credit risk profile
The grading also reflects comfortable credit risk profile: consolidated networth of Rs 1,281.5 crore as on June 30, 2017, is adequate to support capital market businesses and also its retail lending business through its full owned subsidiary IVL Finance.
 
Weakness
* Limited external interface
The company's external interface is, however, limited compared with those provided by its peers. In capital market, company has recently set up research team and will be providing research services to its clients in the near term.

About the Company

Incorporated as GPF Securities Pvt Ltd in 1995, IVL was a subsidiary of Indiabulls Financial Services Ltd until December 2007. IVL is one of India's leading capital market company providing securities, commodity and currency broking services. The company is listed on both the BSE Limited and the National Stock Exchange of India Limited. IVL, under its wholly own subsidiary, IVL Finance Ltd, has started lending in consumer finance space which will mainly include personal loans and business instalment loans.
 
For fiscal 2017, IVL reported a consolidated income and profit after tax (PAT) of Rs 509 crore and Rs 102 crore, respectively; against Rs 410 crore and Rs 74 crore, respectively, for fiscal 2016. Client base is 7 lakh, with a network of 19 branches as on March 31, 2017.
 
For the three months ended June 2017, consolidated total income and PAT were Rs 172.2 crore and Rs 50.3 crore, respectively, against Rs 101.6 crore and Rs 20.4 crore, respectively, for three months ended June 2016.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.
Annexure - Details of Instrument(s)
ISIN Name of the instrument Date of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs. Crore) Rating Assigned with outlook
NA NA NA NA NA NA NA
Annexure - Rating History for last 3 Years
  Current 2017 (History) 2016  2015  2014  Start of 2014
Instrument Type Quantum Rating Date Rating Date Rating Date Rating Date Rating Rating
  Broker Quality Grading 0 BQ 1   No rating Changes    No rating Changes    No rating Changes  30-10-14  BQ 1 Withdrawal
Table reflects instances where rating is changed or freshly assigned. 'No Rating Change' implies that there was no rating change under the release.
 
Links to related criteria
Rating Criteria for Broker Quality Grading

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