Fitch rates FINO BBB(ind)

Fitch Ratings said it assigned Financial Inclusion Network and Operations Ltd. a national long-term rating of BBB(ind).

The outlook is stable.

The agency also assigned FINO's bank facilities BBB(ind)/ A2(ind).

Ratings are based on a consolidated view of FINO, its subsidiaries and group company FINO Fintech Foundation, the agency noted.

Ratings reflect the company's current strong liquidity position after the Rs. 1.5 billion investment by Blackstone GPV Capital Partners (Mauritius) VI-B FDI Ltd. (Blackstone) in July, the high growth potential of India's financial IT services industry and the market leadership enjoyed by the company, Fitch said.

Ratings also factor in FINO's ability to offer a wide range of last-mile services relating to banking, insurance, government services and retail across India, based on its technology as well as its nationwide network of 20,000 business correspondents, the agency said.

The company is likely to see an improvement in leverage (adjusted debt net of cash/operating EBITDAR) to below 3.5x for fiscal 2012 from 6.79x in fiscal 2011, according to Fitch.

Ratings are constrained by revenue concentration in few clients, significant working capital requirements and expected moderation in profit margins due to increasing competition and higher operating costs, the agency said.

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