Rating Rationale
October 04, 2019 | Mumbai
CRISIL 'BQ 1' assigned to Indiabulls Ventures Limited
Detailed Rationale

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 for the broking business. 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 6514 crore as on June 30, 2019 (Rs. 6426 crore as on March 31, 2019), is adequate to support capital market businesses and also its retail lending business through its wholly owned subsidiary Indiabulls Consumer Finance Limited (IBCFL).
 
Weakness
* Average external interface
The company's external interface, while improving, is however, average compared with those provided by its peers. In capital market, company has also set up a research team and has started providing research services to its clients.
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 has received shareholder approval to transfer its stock broking business on a slump sale basis to its wholly owned subsidiary, Indiabulls Securities Limited. As IVL awaits regulatory approvals, broking business continues to be done in IVL.
 
IVL, through its wholly own subsidiary, IBCFL, is also present in consumer finance space which mainly include personal loans and business instalment loans.
 
For the three months ended June 2019, consolidated total income and PAT were Rs 713 crore and Rs 122 crore, respectively, against Rs 350 crore and Rs 87.7 crore, respectively, for three months ended June 2018.

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 2019 (History) 2018  2017  2016  Start of 2016
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
  Broker Quality Grading     BQ 1       19-09-18    BQ 1   01-08-17  BQ 1  28-04-16  BQ 1  Withdrawn
All amounts are in Rs.Cr.
Links to related criteria
Rating Criteria for Broker Quality Grading

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