Rating Action:
$ After February 2024 payout # Indicates door to door tenure; actual tenure will depend on the level of prepayments in the pool, exercise of the clean-up call option and extension due to moratorium ^ Additionally scheduled excess interest spread after February 2024 payout (EIS) approximating to Rs. 14.78 crore (assuming zero prepayments and post servicer fee payment) also provides credit support to PTCs. & Series A PTC holders are entitled to receive timely interest and timely principal 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
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL AAA (SO)’ rating for Series A pass-through certificates (PTCs) issued by ‘Platinum Trust SEP 2022 – TRANCH II’ and reaffirmed its ‘CRISIL A (SO) Equivalent’ for the second loss facility. The transaction is backed by receivables from a pool of vehicle and tractor loans originated by Cholamandalam Investment & Finance Company Limited (CIFCL; rated ‘CRISIL A1+’). The rating/ credit opinion is based on the credit support available to the PTCs, credit quality of underlying receivables, CIFCL’s origination and servicing capabilities, the payment mechanism, and soundness of the transaction’s legal structure.
The pool has exhibited good collection performance as seen by strong collections ratios. The cumulative collection ratio (CCR)[1] for the pool is robust at 98.9%. This has led to minimal delinquencies in the pool as reflected in 0+ overdue of 0.7%. The healthy collection performance coupled with high amortisation of around 56.5% has led to an increase in the credit cover available to future PTC payouts from the cash collateral.
The pool is eligible for reset of credit enhancement. CRISIL Ratings has evaluated the reset in line with regulatory guidelines. However, investor consent is yet to be received. On receiving consent of the investor and trustee, a maximum amount of Rs 10.11 crore (30.8% of the current total cash collateral) can be released from the credit enhancement in proportion of Rs. 4.19 crore from First Loss Facility and Rs. 5.92 crore from Second Loss Facility.
[1] CCR = {Total collections in the pool/(Total billings + opening overdues at the time of securitisation)} |
Key Rating Drivers & Detailed Description Strengths:
Weakness:
Borrowers in the underlying pool could come under pressure due to a challenging macroeconomic environment. Headwinds such as increased fuel costs, an increasing interest rate scenario, and moderation in demand on account of inflation and geo-political uncertainties. These factors may hamper pool collection ratios. [1] MCR = Monthly collections in the pool / Monthly billings |
Liquidity: Strong Liquidity position is strong given that the credit enhancement (internal and external combined) in the structure is above 1.5 times the estimated base shortfalls on the residual pool cash flows.
These aspects have been factored by CRISIL in its rating analysis. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Pool At the time of securitisation, the transaction was backed by a pool of vehicle and tractor loan receivables originated by CIFCL. The pool had a weighted average seasoning of 17.2 months. The top 3 states (Tamil Nadu, Chhattisgarh, and Uttar Pradesh) account for 37.5% of the pool principal. The average ticket size of pool loans is Rs 6.73 lakh, and the weighted average interest rate and LTV at disbursement for pool loans was 13.41% and 81.2% respectively. All contracts were current as on cut-off date (August 31, 2022).
Pool Performance Summary (as after February 2024 payouts)
Counterparty details
About the Originator Part of the Chennai-based Murugappa group, Chola Finance was incorporated in 1978. The company provides vehicle financing and LAP as well as home loans, MSME and agricultural loans. It has ventured into new businesses in the consumer and MSME ecosystems, namely CSEL, SBPL and SME finance in the second half of fiscal 2022. It had 1,309 branches across 29 states in India, with 90% presence across tier III to tier VI cities, as on December 31, 2023.
The Murugappa group holds 51.6% equity stake in Chola Finance, of which 45.5% is held by Cholamandalam Financial Holdings Ltd, a group company.
Chola Finance has two subsidiaries: Cholamandalam Securities Ltd and Cholamandalam Home Finance Ltd, a joint venture with Payswiff Technologies Pvt Ltd and three associates: White Data Systems India Pvt Ltd, Vishvakarma Payments Pvt Ltd and Paytail Commerce Pvt Ltd.
As on December 31, 2023, profit after tax (PAT) was Rs 2,364 crore on total income (net of interest expense) of Rs 7,073 crore, against Rs 1,813 crore and Rs 5,169 crore, respectively, for the corresponding period of the previous fiscal.
Key Financial Indicators
Past rated pools CRISIL Ratings has ratings outstanding on fifteen securitisation transactions originated by CIFCL. CRISIL Ratings is receiving monthly performance reports pertaining to these transactions. |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
1 crore = 10 million #Indicates door to door tenure. Actual tenure will depend on the level of prepayments in the pool, exercise of the clean-up call option and extension due to moratorium $Series A PTC holders are entitled to receive timely interest and timely principal. |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Criteria Details
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