Indiabulls Housing Finance Limited

Capitalisation is marked by sizeable networth of Rs 16,302 crore as on December 31, 2020, supported by healthy internal accruals. Networth coverage for pro-forma net NPAs was also comfortable at around 13 times. Consolidated Tier-1 capital adequacy ratio (CAR) was healthy at 23.7% as on December 31, 2020, as was total CAR at 30.5%. Consolidated on-book gearing was comfortable at 4.0 times as on December 31, 2020 (4.9 times as on March 31, 2020). Given the strong liquidity that IBHFL maintains on a steady-state basis, net gearing was 3.3 times as on December 31, 2020.

IBHFL reported gross NPA of 1.75% as on December 31, 2020 compared to 1.84% as on March 31, 2020. Excluding the impact of the Supreme Court order on stay on NPA recognition, pro-forma gross NPA was at 2.44% as on December 31, 2020. Accelerated write-offs, primarily in the commercial credit portfolio, also supported the asset quality metrics during the current fiscal.

IBHFL is the one of the larger housing finance companies (HFCs) in India with total AUM of Rs 86,566 crore as on December 31, 2020. The share of housing loans within the overall AUM continues to increase – the same has risen to 68% as on December 31, 2020, from 50% as on March 31, 2015. The company’s LAP portfolio accounted for 19% of the overall AUM as on December 31, 2020, with remaining 13% was towards commercial credit. Going forward, the proportion of housing loan and LAP is expected to increase further from current levels.

Asset-quality risks arising from a sizeable large-ticket commercial credit portfolio of Rs 11,340 crore as on December 31, 2020 persist, and could impact the company’s portfolio performance. Given the chunkiness of loans (average ticket size of Rs 150 crore), even a few large accounts experiencing stress could impact asset quality

The management has recalibrated their business model in light of funding access challenges that the company, as well as non-banking financial companies (NBFCs) in general have faced in recent times. Under the revised business model IBHFL plans to move towards a less risky and asset-light framework, wherein disbursements will primarily be in the housing loans and LAP segments (with potentially 60:40 split), with a low proportion of incremental disbursals in developer finance portfolio. Furthermore, on a steady state basis, of the overall disbursals, a significant proportion will be either co-originated or sold-down to banks.