Detailed Rationale CRISIL Ratings has assigned its ‘Provisional CRISIL AAA (SO)’ ratings to pass-through certificates (PTCs) issued by ‘Ithaca CV Trust Jun 2022’ under a securitisation transaction originated by IndoStar Capital Finance Limited (IndoStar; rated ‘CRISIL AA-/Watch Negative/CRISIL A1+/Watch Negative’).
This securitisation transaction is backed by receivables from vehicle loans originated by IndoStar. The rating is based on the credit support available to the PTCs, credit quality of underlying receivables, IndoStar’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
The transaction has a ‘Par with turbo amortisation’ structure. IndoStar will assign the pool to ‘Ithaca CV Trust Jun 2022’, which will issue the PTCs to investors. PTC payouts are supported by cash collateral in the form of fixed deposits, and the subordination of EIS. IDBI Trusteeship Services Limited (ITSL) will be appointed to monitor the overall transaction on behalf of the PTC investors.
The total credit support available to PTC payouts in the transaction structure is as below:
PTC holders are entitled to receive timely interest and timely principal payments on a monthly basis.
Additional disclosures for Provisional ratings: The provisional rating is contingent upon execution of the following documents:
Additional documents executed for the transaction, if any, should also be provided. The provisional rating shall be converted into a final rating after receipt of transaction documents duly executed within 90 days from the date of issuance of the instrument.
The final rating assigned post conversion shall be consistent with the available documents. In case of non-receipt of the duly executed transaction documents within the above-mentioned timelines, the rating committee of CRISIL Ratings may grant an extension of up to another 90 days.
Rating that would have been assigned in absence of the pending steps/ documentation: In the absence of pending documentation considered while assigning provisional rating as mentioned above, CRISIL Ratings would not have assigned any rating.
Risks associated with provisional nature of credit rating: A prefix of 'Provisional' to the rating symbol indicates that the rating is contingent upon occurrence of certain steps or execution of certain documents by the issuer, as applicable. In case the documents received and/or completion of steps deviates significantly from the expectations, CRISIL Ratings may take an appropriate action including placing the rating on watch or a rating/outlook change, depending on status of progress on a case to case basis. In the absence of the pending steps / documentation, the rating on the instrument would not have been assigned ab initio. |
Key Rating Drivers & Detailed Description Supporting Factors
Constraining Factors
These aspects have been factored by CRISIL Ratings in its rating analysis. |
Rating Sensitivity factors
Downward
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About the Pool The securitiation transaction is backed by a pool of vehicle loan receivables originated by IndoStar. As of the pool cut-off date, pool loans had a weighted average seasoning of 10.0 months (measured from the disbursement date to cut-off date) and a weighted average tenure of 40.7 months (measured from disbursment date to the last EMI date). The pool loans had an average disbursement amount of INR 6.7 lakh, with a weighted average IRR of 16.6% and weighted average LTV of 75.1%. Loans originated in the top 3 states (Tamil Nadu, Punjab, Madhya Pradesh) accounted for 32.8% of the initial pool principal. The proportion of used vehicle loans was 91.3%. As of the cut-off date (August 31, 2022), all loans were current on repayment, and had shown zero instances of delinquency since disbursement.
About the Originator IndoStar Capital Finance Limited, incorporated in November 2011, is registered with the Reserve Bank of India as a systemically important, non-deposit taking NBFC. The company was founded and incorporated by private equity players (Everstone, Goldman Sachs Baer Capital Partners, ACPI Investment managers, and CDIB International) with an initial capital of around Rs 900 crore. In May 2020, Brookfield invested Rs 1,225 crore and became the largest shareholder and co-promoter. As on June 30, 2022, Brookfield held 56.20% stake, followed by IndoStar Capital Mauritius (owned by the Everstone group and other marquee private equity investors) at 30.47%. The company started its business as a wholesale financier in fiscal 2011, and then entered the SME finance (loan against property) segment in fiscal 2015. In fiscal 2018, the company started offering vehicle finance and housing finance (through its wholly owned subsidiary, IndoStar Home Finance Private Limited). In fiscal 2019, the company acquired the CV finance business of IIFL Finance Limited. Going ahead, the company plans to focus on used commercial vehicle financing and housing finance. |
Key Financial Indicators
Past rated pools This is the fifth securitisation transaction of IndoStar to be rated by CRISIL Ratings. CRISIL Ratings is receiving monthly performance reports pertaining to the previous transactions. |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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