Hinduja Housing Finance Ltd (HHFL), a mortgage lender with an asset book of about Rs 6,800 crore, will raise about Rs 300 crore in subordinate capital and Rs 500 crore in debt through median offering.
The affordable housing financier said it expected 30 per cent growth year-on-year (YoY) for three years, with fresh infusion of equity worth more than Rs 160 crore from the Hinduja group in FY23.
Sachin Pillai, managing director of HHFL, told 'Business Standard' till date the company had used funds drawn from bank lines and it is now broadening its resource profile.
Besides banks, HHFL uses commercial papers to fund short-term requirements. Being a wholly-owned subsidiary of Hinduja Leyland Finance Ltd (HLF), the company has access to an established lender. It is able to raise funds at competitive rates for long tenures.
HHFL’s gearing ratio, a measurement of an entity’s financial leverage, stood at 6.10x as on March 31, 2022 and 6.16x as on December 31, 2022. CARE Ratings expects net gearing to not exceed 7x on a sustained basis. Its subordinated debt capital and debentures carry “AA” rating from rating agency CARE.
HHFL’s capital adequacy ratio (CAR) was 18.78 per cent on March 31, 2022, against the regulatory requirement of 15 per cent. Its CAR was 19.88 per cent at the end of March 2021. Its Tier-I capital stood at 18.67 per cent as on March 31, 2022. Its parent Hinduja Leyland Finance infused capital to the tune of Rs 77 crore into HHFL in FY22 and has infused Rs 161 crore in FY23.
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Pillai said the demand in the affordable housing segment is holding steady and the company has entered the low income housing segment. In the initial years, the growth was slow and steady. The growth gathered pace, after establishing risk management and scaling up of the branch network.
Its assets under management (AUM) increased from Rs 2,585 crore as on March 31, 2021 to Rs 4,047 crore as on March 31, 2022, and further to Rs 6,800 crore by March 2023. The increase in the portfolio was supported by an increase in the number of branches from 95 as on March 31, 2021 to 184 on December 31, 2022.
Referring to the asset profile of HHFL, CARE said there was low seasoning of the portfolio with significant growth in loan portfolio.
It has moderate asset quality and there are inherent risks associated with its borrower profile mostly being self-employed in the informal segment.
The gross non-performing assets (GNPA) and net non-performing assets (NNPA) stood at 2.94 per cent and 1.63 per cent, respectively, as on December 31, 2022.