Piramal Housing Finance Private Ltd (PHFPL), which began operations last month, will make its first market borrowings through Rs 400 crore Commercial Paper, a short-term money market instrument.
Rating agency Icra has assigned “A1+” rating to the housing finance company’s commercial paper.
Icra said the company has the operational synergies with its parent Piramal Finance Ltd (PFL) due to PFL’s experience in real estate lending and the large network of developers with relationships built over a period. PFL is a wholly-owned subsidiary of Piramal Enterprises.
Moreover, the association with the Piramal Group will provide it with enhanced financial flexibility. The HFC has brought seasoned industry professionals on board who have prior experience in the retailing lending space.
Given the inherently low-risk profile of housing loan segment, the build-up of the retail book would help alleviate the risk profile of the portfolio on a consolidated basis, Icra said.
Icra said it has taken note of early stages of operation of the company, limited experience of the group in retail lending and the aggressive growth targets for the entity.
Flagging some risks, rating agency said PHFPL is targeting a rapid expansion of its loan book to over Rs 15,000 crore by end of FY2020. It has already booked assets worth Rs 200 crore since it commenced business in early September 2017.
The company’s ability to execute its business plans and grow profitability, raise funds at competitive rates and maintain healthy asset quality would remain the key sensitivities, Icra said.
It has a limited track record of the group in retail lending segment. However, the group’s long-standing experience and expertise in the wholesale lending segment and experience in the real estate segment will come in handy for business operations.
Housing finance would remain the key focus area for the company. But, PHFPL would also offer products like loans against property (LAP, 15 per cent of portfolio on steady-state basis) and construction finance (20 per cent of portfolio on a steady-state basis).