Detailed Rationale CRISIL Ratings has reaffirmed its ratings on Series A1 Pass-through certificates (PTCs) issued by ‘Leo August 2022’ at ‘CRISIL A (SO)’. The transaction is backed by Ugro Capital Limited’s (Ugro; rated ‘CRISIL A-/CRISIL PPMLD A-/Positive/CRISIL A1’) share in receivables from unsecured business loans originated through various co-lending and business correspondence partners. The rating action is driven by the improved credit cover available to PTC holders on account of considerable amortisation and healthy pool performance. The transaction is supported by external credit enhancement in the form of fixed deposit amounting to Rs. 2.84 crore (7.36% of initial pool principal), which covers 18.9% of the scheduled future payouts to investors (as after May-2023 payouts).
9 months post securitisation (as after May-2023 payouts), the 3-month average collection ratio (MCR)1 of the pool was 102.9%, while the cumulative collection ratio (CCR)2 was 96.7%.
The transaction has a 'par with excess interest spread (EIS)' structure. Series A1 PTCs are entitled to monthly interest, while the principal payment is promised on an ultimate basis. |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
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Liquidity: Adequate The cash collateral available in the transaction is Rs 2.84 crore (7.4% of the pool principal) is in the form of a fixed deposit. Liquidity is adequate given that the credit enhancement available in the structure is sufficient to cover losses exceeding 1.9 times the currently estimated base shortfalls. |
Rating Sensitivity Factors Upward factors:
Downward factors
CRISIL Ratings has adequately factored all these aspects in its rating analysis. |
About the pool The securitisation transaction is backed by Ugro’s share in a pool of receivables from unsecured business loans originated through various co-lending and business correspondence partners, namely Lendingkart Finance Limited, Digikredit Finance Private Limited, Inditrade Fincorp Limited, Nomisma Mobile Solutions Private Limited (trademark ‘ftcash’), and Riviera Investors Private Limited (wholly owned subsidiary of Indifi Technologies Private Limited). As of the pool cut-off date, the pool had a weighted average net seasoning of 11.5 monthly instalments. The average ticket size for pool loans was Rs 5.6 lakh, with weighted average interest rate of 24.0% (however, weighted average hurdle rate was 14.1%, which is Ugro’s share in the underlying loans), and a weighted average original tenure of 33.3 months. All the contracts in the pool were current as on the pool cut-off date. CRISIL Ratings has adequately factored all these aspects in its rating analysis. |
Pool Performance Summary (as after May-2023 payout)
1 MCR = Monthly collections in the pool / Monthly billings 2 CCR = {Total collections in the pool/(Total billings + opening overdues at the time of securitisation)} 3TCR = The minimum cumulative collection ratio required on a pool’s future cash flows, to be able to service the investor payouts on time |
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Counterparty details
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About the Originator UGRO is a systemically important non-banking finance company (NBFC) engaged in financing secured and unsecured loans to MSMEs. It was incorporated in 1993 as Chokhani Securities Ltd and was acquired and renamed as UGRO Capital Ltd in 2018 by Mr Shachindra Nath (Executive Chairman and Managing Director) who has over two decades of experience in the financial services industry. The company is publicly listed on the Bombay Stock Exchange since 1995 and got listed on the National Stock Exchange in August 2021. Mr. Nath is supported by seasoned key management personnel each having expertise of over a decade in their respective functional domains.
The company has raised capital from marquee private equity investors namely Newquest Asia Investments (TPG), Clearsky Investment holdings (ADV), Samena and DBZ Cyprus (PAG) who invested in the initial phase of UGRO’s evolution along with Mr Shachindra Nath. The four investors together hold 65% as on December 31, 2022.
The company commenced operations in January 2019 and had an AUM of Rs 5095 crore as on December 31, 2022, of which Rs 3320 crore was on-book. The company has diversified presence across 16 states (99%) with ~98 branches as on December 31,2022, and has further entered another 16 states through limited presence (total exposure of ~1%). None of the states are contributing more than 16% of the AUM as on December 31, 2022.
The company reported a profit after tax of Rs 26 crore on a total income (net of interest expense) of Rs 264 crore for the nine months ended December 31, 2022 as against Rs 15 crore and Rs 175 crore, respectively, for fiscal 2022.
Past rated pools CRISIL Ratings has outstanding ratings on 4 securitisation transactions originated by Ugro. CRISIL Ratings is receiving monthly performance reports pertaining to these transactions
Key Financial Indicators
*Gearing is adjusted for the intangible assets on the balance sheet and Direct Assignments. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, and exercise of the clean-up call option |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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