IIFL turns bullish on CRISIL Rating

IIFL (India Infoline), today announced that two of its group companies, India Infoline Finance Ltd and India Infoline Housing Finance Ltd had received a credit rating upgrade by CRISIL Ltd, an S&P Global Inc. company. IIFL is one of India’s leading diversified financial services conglomerate.CRISIL has enhanced the rating for India Infoline Finance Ltd, and its subsidiary India Infoline Housing Finance Ltd, to ‘CRISIL AA/Stable’ from ‘CRISIL AA-/Stable’. The rating is applicable on the long-term debt instruments of the company. India Infoline Finance Ltd. is the Non-Banking Finance arm of IIFL Group. IIFL share price tuned bullish on the enhanced rating rising around 7% and trading at Rs. 298.The upgraded rating mainly reflects IIFL improved capital position and well-diversified business risk profile with presence across the financial services space and increasing focus towards retail lending. The group has also strengthened its senior management team in the past two years. The fact has been confirmed by CRISIL in a rating note.It also added that the outlook might be revised to ‘Positive’ if IIFL remarkably strengthens its market position while sustaining profitability and asset quality.CRISIL combined the business and financial risk profiles of IIFL Holdings Ltd and its subsidiaries, including India Infoline Finance for arriving at the rating.

Net Worth and Capital RaisingCRISIL has stated in its rationale for the rating upgrade that IIFL capitalization has improved appreciably over the past few quarters. The company’s net worth has also increased to Rs 40.96 billion as on March 31, 2016, from Rs 28.2 billion as on March 31, 2015. The company’s net worth is anticipated to increase further over Rs 50 billion by March 2017, which is more than 75% increase over the last two years. IIFL net worth increase is led by the capital raising of around Rs 20 billion over the past 12 months.In July 2016, IIFL Finance had announced that CDC Group Plc (a British government-owned development finance institution) would invest Rs 10 billion in the company in the form of compulsorily convertible preference shares for a 15.45% stake. After this capital infusion, IIFL Finance’s gearing is expected to improve and stay below six times from 8.1 times as on March 31, 2016.

Outlook: StableCRISIL believes that the IIFL group will keep on witnessing healthy growth in the lending business over the medium term while maintaining its strong market position in the capital market businesses as well as its comfortable capitalization.

The outlook may be revised to ‘Positive’ if the group significantly strengthens its market position while sustaining profitability and asset quality. The outlook may be revised to ‘Negative’ in the case of lower-than-expected growth in business or significant deterioration in asset quality or profitability.IIFL is top 500 performong stocks for the quarter according to Dynamic Levels. For details on the stock refer to IIFL share price history page of the company’s website.

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