Kochi: Rating agency CARE Rating upgrades ratings on various debt instruments of Muthoottu Mini Financiers Ltd to BBB+ (Stable) from (BBB Stable).
Muthoottu Mini registered a growth of 18 percent for the financial year 2020-21. Muthoottu Mini, during FY 20-21 and mopped up Rs 700 crore through listed public Non-Convertible Debenture (NCDs) issues. Further, Muthoottu Mini posted excellent organic growth, adding 4 more lending banks during the period. As many as 23 branches and 5 zonal offices were added during the financial year.
Responding to the growing preference for digital products, the group is also working on digital innovations in the gold loans sector. Muthoottu Mini has also chalked out major expansion and restructuring initiatives, in its effort to realize expectations of a 75% growth and to open 100+ new branches in the current financial year.
Speaking on the upgrade in ratings, Mathew Muthoottu, Managing Director, Muthoottu Mini said, “We at Muthoottu Mini Financiers consider this upgrade in ratings is an indication that the company is growing in the right direction. This could not have been possible without the unstinted support of our customers. This upgrade will further enable us in widening our reach both in the corporate and retail sectors. We believe that our commitment is to provide support to fulfill the financial needs of our customers.”
Muthoottu Mini Financiers Ltd has strong brand value, experienced promoters, adequate risk management systems, comfortable capital adequacy levels, Improvement in profitability, and Good Asset Quality which has been recognized by rating agencies, reflecting improved ratings.
The total CAR and Tier I CAR of the company stood at 25.75% and 22.38%, respectively, as of March 31, 2021, with a noted increase in the scale of operations during the period.
The group has been maintaining a ROTA above 2.50% on a sustained basis along with improvement in scale of operations and improvement in resource profile with a good mix of borrowings from diversified sources. MMFL has registered an improvement in interest spread of 0.82% in FY21 as compared to the previous year, by reducing the cost of borrowings and operating expenses with increased AUM per branch. The company is aiming at further accelerating profitability growth in the coming years.
Backed by one of the safest securities around i.e. gold, the loans are secure with good asset quality. The proportion of gold loans having tenure up to 6 months increased from 1% as of March 31, 2020, to 81% as of March 31, 2021, which allows the company to keep price volatility in check. Gross-NPA and Net-NPA have reduced to 0.86% and 0.75% as of March 31, 2021, as against 1.89% and 1.34% as of March 31, 2020.