Press Release Ambit Finvest Private Limited November 15, 2017 Ratings Instruments / Facilities
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Amount (Rs. crore) Ratings Rating Action 50 Commercial Paper* CARE A1+ (SO) Reaffirmed (Rs. Fifty crore only) *based on credit enhancement in the form of an unconditional and irrevocable guarantee from the parent, Ambit Private Limited (APL) Details of instruments/facilities in Annexure I Detailed Rationale& Key Rating Drivers The rating is based on the credit enhancement in the form of an unconditional and irrevocable guarantee from the parent company, Ambit Private Limited (APL). The rating takes into account strong promoters and experienced management team of the Ambit Group, good track record in the investment banking space, comfortable capitalization & liquidity position, good asset quality but low seasoning of the portfolio and good risk management systems. The rating also factors in concentration risk in the NBFC business, high dependence of the group’s business on capital market and market risks related to proprietary trading. Reducing reliance on the capital markets, capitalization levels, profitability, asset quality and retention of key employees are the key rating sensitivities. Detailed description of the key rating drivers Key Rating Strengths Strong management team & promoters: Ambit group is well supported by a strong management team having rich experience in their respective fields. The promoters include Mr. Ashok Wadhwa and Qinvest (a Qatar based investment bank). Mr. Wadhwa, with nearly three decades of work experience, is the group Chief Executive Officer (CEO) and founder of Ambit Group. Mr. Rahul Gupta is the co-group Joint CEO and has more than two decades of experience in the banking sector. Good track record in investment banking space: APL has so far consummated more than 150 transactions in investment banking and has a broad based coverage of large and mid-cap corporations. Over the past four years, it has executed deals worth $7.5 billion. Comfortable capitalization and liquidity position: The group is well capitalized with consolidated tangible net worth of Rs.555.67 crore as on March 31, 2017. At the holding level, gearing is very low at 0.11 times as on March 31, 2017 (0.20 times as on March 31, 2016). Ambit Finvest Private Limited (AFPL) reported Capital Adequacy Ratio (CAR) and Tier I CAR of 79.39% and 79.15% respectively as on March 31, 2017 (CAR of 58.91% and Tier I CAR of 58.66% as on March 31, 2016). As on March 31, 2017, the gearing ratio stood at 0.43 times (March 31, 2016: 0.69 times). The gearing ratio for AFPL stood at 0.51 times as on September 30, 2017. Good asset quality but low seasoning of the portfolio: AFPL has maintained good asset quality and reported nil NPA as on September 30, 2017. The lending is secured with an average security cover of over 2 times. Although, the company has maintained good asset quality, the company has recently ventured into the business of loans to mid corporate segment. However, seasoning of this portfolio remains low and the asset quality is yet to be tested. Good risk management systems: Ambit group has well documented risk management framework to handle the risk in the institutional broking and proprietary trading business. The company has various committees in place which approve and review risk appetite and designs enterprise wide risk framework. Also, the limits are in place with respect to sectoral and scrip wise exposures.
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Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications 1
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Press Release Key Rating Weaknesses Concentration risk in the NBFC business: The group started the NBFC business in FY11 (refers to period from April 01 to March 31) through AFPL and currently has presence in structured / business loans, real estate funding, promoter and margin funding. As on September 30, 2017, business loans (loans to corporates excluding real state funding) constituted 68%, real estate funding 15% and margin funding 17% of the total loan portfolio. High dependence of group’s business on capital market and market risks related to proprietary trading: Majority of the Ambit group’s revenue generating businesses like merchant banking, institutional equity broking, proprietary trading and lending against shares are dependent on capital market conditions. Moreover, the profitability of the business is primarily dependent on the performance of the merchant banking and lending businesses. Analytical approach: CARE has assessed the rating assigned to the instruments of Ambit Finvest Private Limited based on the basis of credit enhancement in the form of an unconditional and irrevocable guarantee from the parent company, Ambit Private Limited (APL). CARE has analyzed the credit profile of AFPL by considering consolidated financials of the parent APL. Applicable Criteria: Criteria on assigning Outlook to Credit Ratings CARE Policy on Default Recognition Rating of Short term instruments Rating Methodology: Factoring Linkages in Ratings Rating Methodology- Non-Banking Finance Companies Financial ratios - Financial Sector About the Company Ambit Group, promoted by Mr. Ashok Wadhwa, is into various financial activities like investment banking, institutional equity broking, wealth management, private equity, investment advisory, secured lending and proprietary trading activities. In May 2016, the ultimate holding company of the group, Ambit Holdings Pvt. Ltd. (AHPL) was merged with Ambit Corporate Finance Private Limited (ACFPL), with an effective date of April 1, 2015. ACFPL became the holding company of the Ambit group and was renamed as Ambit Private Limited (APL). APL is registered as a Category I merchant banker with Security Exchange Board of India (SEBI) and is into investment banking business since 1998. APL provides investment banking services to companies in structuring and execution of M&As, divestitures, JVs, spin-offs and capital mobilization. The group’s various businesses include institutional equity broking, wholesale lending, wealth management, private equity and investment advisory. Following is the brief financial table of Ambit Finvest Private Limited. Brief Financials (Rs. crore) FY16 (A) FY17 (A) Total operating income 40.77 51.54 PAT 11.86 14.05 Interest coverage (times) 3.09 2.67 Total Assets 307.04 284.99 Net NPA (%) Nil Nil ROTA (%) 4.53 4.75 A: Audited Following is the brief financial table of Ambit Private Limited (Consolidated): Brief Financials (Rs. crore) Total operating income PAT Overall gearing (times) Total Assets ROTA (%) A: Audited
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FY16 (A) 204.38 30.73 0.20 651.44 4.67
FY17 (A) 242.96 52.41 0.11 766.57 7.39
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Press Release Status of non-cooperation with previous CRA: Not applicable Any other information: Not applicable Rating History for last three years: Please refer Annexure-2 Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to
[email protected] for any clarifications.
Analyst Contact: Name: Aditya Acharekar Tel: 022-6754 3528 Mobile: +91-9819013971 Email:
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About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices. Disclaimer CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors.
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Press Release Annexure-1: Details of Instruments/Facilities Name of the Date of Instrument Issuance Commercial Paper
-
Coupon Rate
Maturity Date
Size of the Issue (Rs. crore)
Rating assigned along with Rating Outlook
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Upto 1 year
50.00
CARE A1+ (SO)
Annexure-2: Rating History of last three years Current Ratings Type Rating Name of the Amount Sr. No. Instrument/Bank Outstanding Facilities (Rs. crore) 1.
Commercial Paper
ST
50.00
CARE A1+ (SO)
2.
Debt
LT
188.25
Provisional CARE A+ (SO); Stable
3.
Debt
LT
106.75
CARE A+ (SO); Stable
4.
Commercial Paper-Commercial Paper (IPO Financing)
ST
200.00
CARE A1+ (SO)
5.
Debt
LT
40.00
CARE A+ (SO); Stable
6.
Debt
LT
15.00
CARE A+ (SO); Stable
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Rating history Date(s) & Date(s) & Date(s) & Date(s) & Rating(s) Rating(s) Rating(s) Rating(s) assigned in assigned in assigned in assigned in 2017-2018 2016-2017 2015-2016 2014-2015 1)CARE A1+ 1)Provisional 1)CARE A1+ (SO) (SO) CARE A1+ (SO) (In Principle) (30-Dec-16) (20-Oct-15) (07-Oct-14) 2)Provisional 2)CARE A1+ CARE A1+ (SO) (SO) (In (29-Aug-16) Principle) (12-May-15) 1)Provisional 1)Provisional 1)Provisional 1)CARE A+ (SO) CARE A+ (SO); CARE A+ (SO) CARE A+ (SO) (In Principle) Stable (29-Aug-16) (20-Oct-15) (20-Jan-15) (14-Aug-17) 2)Provisional 2)CARE A+ (SO) CARE A+ (SO) (In Principle) (13-Aug-15) (07-Oct-14) 3)CARE A+ (SO) (In Principle) (12-May-15) 1)CARE A+ 1)CARE A+ (SO) 1)CARE A+ (SO) 1)CARE A+ (SO) (SO); Stable (29-Aug-16) (20-Oct-15) (20-Jan-15) (14-Aug-17) 2)CARE A+ (SO) (13-Aug-15) 3)CARE A+ (SO) (12-May-15) 1)CARE A1+ (SO) (30-Dec-16) 2)Provisional CARE A1+ (SO) (29-Aug-16) 1)CARE A+ 1)CARE A+ (SO) (SO); Stable (29-Aug-16) (14-Aug-17) 1)CARE A+ (SO); Stable (14-Aug-17)
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PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune - 411 015. Cell: +91-98361 07331 Tel: +91-20- 4000 9000 E-mail:
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CIN - L67190MH1993PLC071691
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