Indiabulls Housing Finance Limited

One of the largest Pan-India HFCs with strong financial performance and credit ratings

- IBFL’s geographical reach within India across Tier I, Tier II and Tier III cities enable the company to target and grow their customer base. IBHFL offer loans to their target client base of salaried and self-employed individuals and MSMEs.

- IBHFL’s presence across India allows them to undertake loan processing, appraisal and management of customer relationships in an efficient and cost-effective manner. Further, it’s a well-capitalized HFC with a strong financial track-record.

Access to diversified funding sources

- Over the years, IBHFL has developed a diversified funding base and has established strong relationships with lenders. Its lenders include PSUs and private banks, and other financial institutions. As at June 30, 2022, their consolidated borrowings  were Rs 31,955.59 crores.

- IBHFL’s strong financial performance, capitalization levels and credit ratings give considerable comfort to their lenders and enable to borrow funds at competitive rates, thereby lowering their overall cost of borrowings.

Prudent credit and collection policies

- IBHFL has separate policies tailored for retail loans and for loans to real estate developers. These policies are aimed at supporting the growth of business by minimising the risks associated with growth in the loan book.

- IBHFL also has an experienced collections team which, with their legal team, have enabled to maintain high collection efficiencies through economic cycles. Their centralized credit analysis processes combined with dedicated collections team help them maintain the quality and growth of total Loan Book.

Susceptibility to asset quality risks arising from the commercial real estate portfolio

- Asset-quality risks arising from a sizeable large-ticket commercial credit portfolio of Rs 11,190 crore as on June 30, 2021 persist, and could impact the company’s portfolio performance. 

- However, RBI’s measure on extension of date of commencement of commercial operations (DCCO) for commercial real estate projects and one-time debt restructuring should provide some respite.

Successful transition to new business model to be established; though IBHFL has demonstrated strong execution capabilities in the past

- 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 a potential 60:40 split), with a low proportion of incremental disbursals in developer finance portfolio.

- The management’s ability to increase the disbursement pace, establish tie-ups with multiple banks and successfully scale-up this model, while maintaining healthy profitability and asset quality is to be witnessed, though the company has demonstrated good execution capabilities in scaling up businesses in the past.