Detailed Rationale
This transaction is backed by a pool comprising Home Loan (HL) and Loan against Property (LAP) receivables originated by EHFL. The ratings are based on the credit quality of the pool cash flow, origination and servicing capabilities of EHFL, credit support available to the PTCs, payment mechanism of the transaction and soundness of the transaction's legal structure.
The transaction has a 'par with Excess Interest Spread (EIS) flow back' structure. EHFL will assign the pool to 'ML Trust 10', a trust settled by Catalyst Trusteeship Limited (CTL), which will issue instruments to investors in exchange for a purchase consideration equal to 90% of future principal outstanding as on the cut-off date (October 31, 2022). Investor payouts for Series A1 PTCs are supported by credit collateral and subordination of excess interest spread (EIS) along with a principal overcollateralization of 10 per cent. Series A1 PTC holders are entitled to receive timely interest and timely principal (atleast 90 per cent of the monthly billed principal).
Total credit support available in the transaction structure is as below:
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Key Rating Drivers & Detailed Description Strengths:
Weakness:
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Rating Sensitivity factors
Downward
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About the Pool
Counterparty Details
Additional disclosures for Provisional ratings: The provisional rating is contingent upon execution of the following documents:
Legal documents * Cash Collateral Agreement * General Power of Attorney * Trust Deed * Deed of Assignment * Security Agent's Agreement
Other documents * Information Memorandum * Legal opinion * Trustee letter * Representations and Warranties letter
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 in line with its policy on provisional ratings.
Rating that would have been assigned in absence of the pending documentation: In the absence of 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 execution of certain documents by the issuer, as applicable. In case the documents received deviates significantly from the expectations, CRISIL Ratings may take an appropriate action including placing the rating on watch or a rating change on a case to case basis. In the absence of the pending documentation, the rating on the instrument would either have been different or not assigned ab initio.
A rating rationale/report indicating the conversion of the 'provisional' rating into 'final' following receipt of all the required final legal documents will be published on the CRISIL website. Please click on the link below for detailed information on CRISIL Rating's policy on provisional rating: Revision in CRISIL policy for assigning 'provisional' rating . |
About the Company
EHFL reported a profit after tax (PAT) of Rs 3.73 crore on total income of Rs 551 crore for fiscal 2021, against a profit of Rs 1.56 crore on total income of Rs 607 crore for fiscal 2020. During first nine months of fiscal 2022 EHFL reported a PAT of Rs 5.4 crore on total income of Rs 392.6 crore.
About the Group The Edelweiss group comprised 30 subsidiaries and associates as on March 31, 2022. The number of companies has come down from 74 as on March 31, 2016, because of multiple factors such as sale, windup and merger among others. The group had 293 offices (including 10 international offices in 6 locations) in around 136 cities as on March 31, 2022. Furthermore, as part of streamlining its operating structure, the group has restructured the businesses into four verticals namely credit, insurance, asset management and asset reconstruction.
The group is present across various financial services businesses, including loans to corporates and individuals, mortgage finance - loans against property and small-ticket housing loans, MSME finance, alternative and domestic asset management, and life and general insurance. In addition, the Balance sheet Management Unit (BMU) focuses on liquidity and asset-liability management.
On a consolidated basis, the group reported PAT of Rs 212 crore on a total income of Rs 4320 crore for fiscal 2022, as against Rs 254 crore on total income of Rs 7015 crore for fiscal 2021.
For the quarter ended June 2022, the group reported net profit of Rs 35 crore on total income of Rs 667 crore, compared to profit of Rs 25 crore and total income of Rs 847 crore during corresponding period in previous fiscal.
Key Financial Indicators (EFSL - Consolidated)
Past Rated Pools CRISIL Ratings is receiving monthly performance reports pertaining to all CRISIL-rated EHFL originated securitisation transactions. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Floating (linked to SBI 3 month MCLR), to be reset every 3 months and with a floor of 11.20 per cent p.a.p.m #Indicates door-to-door tenure; actual tenure will depend on the interest rate movement and level of prepayments in the pool and exercise of clean-up call option. &Series A1 PTC holders are entitled to receive timely interest and and timely principal (atleast 90 per cent of the monthly billed principal) ^Additionally scheduled subordination amounting to Rs 25.43 (assuming zero prepayments and no basis risk) (assuming zero prepayments and no basis risk), which includes an overcollateralization of 10 percent also provides credit support on the PTCs |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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Criteria Details
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