Piramal Enterprises shares rallied 6.4 percent intraday on July 15 after CRISIL reaffirmed its highest rating to the commercial paper of company's subsidiary.
The rating agency has evaluated the business and financial risk profile of the overall financial services business, and also factored the managerial and financial risk profile of the holding company, Piramal Enterprises' (PEL) lending book.
CRISIL has reaffirmed the highest rating, A1+ to Piramal Capital and Housing Finance (PCHFL) for the commercial paper programme worth Rs 10,500 crore.
"The rating reaffirms the company's robust business portfolio, diversified revenue streams and established presence across the spectrum of real estate financing along with increased product offerings," PCHFL said.
Over the last nine months, in line with efforts to improve the asset-liability profile, ever since the first signs of liquidity strain emerged in the Indian market, the company has raised funds of Rs 23,700 crore, it added.
CRISIL in its report stated that the company has put in place adequate credit appraisal, strong risk management and processes, which has supported the reported asset quality metrics.
"The management too has taken steps in order to reduce concentration risk in the portfolio with a focus on growing the individual housing loans portfolio. But, what has really supported the asset quality metrics in the past, has been the ability of the entity to get timely repayments/exits via refinancing," it said.
In fiscal 2019, in addition to a regular Rs 3,601 crore of collections, the group has also received prepayments to the tune of Rs 13,483 crore. For some of the loan accounts, the group has received prepayments covering the scheduled re-payments over the next 12-24 months.
The report stated that on a standalone basis, the resource profile for PCHFL is well diversified across instruments with bank and financial institutions loans at 61 percent, NCDs constituting around 24 percent and commercial papers at 16 percent as on March 31, 2019.
"The management is also taking proactive steps to improve the resource profile mix through increasing long-term funding sources," CRISIL said.
PCHFL has managed a sanction of Rs 1,050 crore ($150 million) of ECBs in the first quarter of fiscal 2020 and also plans to raise additional long term funds in the current fiscal, which would support the diversification into longer-term funding sources, the rating agency added.
CRISIL has recently also assigned rating A1+ to PEL for the short-term non-convertible debentures amounting to Rs 1,500 crore and the commercial paper programme amounting to Rs 12,000 crore by (PEL).
The company reiterated its commitment towards maintaining adequate capital and liquidity, further diversifying its loan book, tapping additional sources of long-term funds and maintaining robust asset quality.
The stock was quoting at Rs 2,044.95, up Rs 99.15, or 5.10 percent on the BSE at 1207 hours IST.
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