Navkar Trust 2021 (Originator: Motilal Oswal Home Finance Limited) Rating Reaffirmed
Rating Action
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to annexure for Details of Instruments & Bank Facilities & PTC investors are entitled to receive timely interest and timely principal on a monthly basis #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
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA (SO)’ rating on Series A pass-through certificates (PTCs), issued by ‘Navkar Trust 2021’ under a securitisation transaction originated by Motilal Oswal Home Finance Limited (MOHFL; rated ‘CRISIL AA/Stable/CRISIL A1+’). The pool is backed by home loan receivables originated by MOHFL. The rating is based on the credit support available to the PTCs, the credit quality of the underlying pool receivables, MOHFL’s origination and servicing capabilities, and soundness of the transaction’s legal structure.
The pool has exhibited robust collection performance as seen by strong collections ratios. The cumulative collection ratio (CCR)[1] for the pool is around 100.0%. This has led to minimal delinquencies in the pool as reflected in 90+ dpd of 0.2% of initial pool principal as of June 2024 payouts. The healthy collection performance coupled with high amortisation of around 52.2% has led to an increase in the credit cover available to future PTC payouts from the cash collateral.
On July 2, 2024, CRISIL Ratings had reaffirmed ratings on Series A pass-through certificates (PTCs) The transaction was eligible for a credit collateral reset of Rs. 9.5 Crore (39.6% of current cash collateral); however, the investor consent (required under RBI regulations) was awaited.
MOHFL has received the investor’s consent for the reset of credit collateral. Following the reset, the revised total cash collateral stands at Rs. 14.6 crore (16.3% of future PTC POS after June 2024 payouts). Given the pool performance and high amortisation of around 52.2%, even after the reset the credit cover available to the PTCs remains commensurate with the outstanding ratings of the instruments. [1]CCR = {Total collections in the pool/(Total billings + opening overdues at the time of securitisation)} |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
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Liquidity: Strong Liquidity position is strong given that the credit enhancement (internal and external combined) in the structure is sufficient to cover losses exceeding 1.5 times the currently estimated base shortfalls.
These aspects have been factored by CRISIL in its rating analysis. |
Rating Sensitivity factors Upward
Downward
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About the pool The pool comprises entirely of home loan receivables. At the time of securitisation, the pool had a weighted average net seasoning of 48.8 months, with top 3 states (Maharashtra, Gujarat & Madhya Pradesh) cumulatively accounting for 93.9% of the initial pool principal as of the pool cut-off date (28-Feb-2021). Average ticket size of the pool was Rs 10.9 lakh and all contracts were current as of the pool cut-off date. The key performance parameters of the pool as after June 2024 payouts are highlighted below
Pool Performance Summary (as after June 2024 payouts)
Rating Assumptions To assess the base case shortfalls for the transaction, CRISIL Ratings has analysed moving portfolio delinquency and static pool information (with information on 90+ delinquencies) for mortgage loan portfolio provided by MOHFL for originations till March 2023 with performance till March 2024.The performance of the portfolio has improved since fiscal 2019 due to several corrective measures taken to address legacy asset quality issues like increasing management depth and experience, strengthening of collections and recovery apparatus and enhancing credit appraisal and risk monitoring systems. The 90+ dpd for the home loan portfolio of MOHFL stood at 1.0% as of March 2024. CRISIL Ratings has also factored in pool specific characteristics and estimated the base case shortfalls in the pool in the range of 4.0 to 6.0% of pool cash flows. CRISIL Ratings has additionally factored in overdues in the pool, and applied stresses commensurate with the rating level to arrive at the rating of the transaction. The following assumptions have been used to address other risks in the transaction:
Counterparty details
About the Company MOHFL, the housing finance arm of MOFSL, was incorporated in October 2013 under the Companies Act, 1956, and received its certificate of registration as a housing finance institution (regulated by the NHB) in May 2014. The company started operations on May 22, 2014. The loan portfolio was Rs 3,780 crore as on December 31, 2023. The company offers housing loans to low- and middle-income groups, with average ticket size of around Rs 10 lakh. Lending to the affordable housing segment accounts for its entire existing loan book. It is present in twelve states/UTs through 108 branches. For the nine months ended fiscal 2024, the company reported profit after tax (PAT) of Rs 100 crore on total income (net of interest expense) of Rs 251 crore, as against Rs 136 crore on Rs 313 crore, respectively, for the year ended fiscal 2023
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Indicates door to door tenure at the time of securitisation. Actual tenure can vary depending on the level of prepayments in the pool, exercise of the clean-up call option and tenure extension due to moratorium/revision in interest rates for underlying contracts $Current coupon rate of 9.35% p.a.p.m. linked to investor’s MCLR, to be reset yearly |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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