S&P gives Indiabulls Housing B

S&P said it assigned B ratings to Indiabulls Housing Finance Ltd. with a positive outlook.

“Our ratings on Ibhfl reflect our view that the company's access to funding will stay susceptible to market conditions, constraining its business profile. Ibhfl's funding is concentrated with a heavy reliance on a top few lenders and sale of assets. The company's very strong capitalization and ample liquidity buffers temper these risks. Ibhfl is a midsize housing finance company in India. It is primarily involved in the origination of mortgage loans and selling them to banks and other financial institutions,” S&P said in a press release.

However, the agency noted Ibhfl’s weak business stability. “The company's growth and profitability took a severe hit in the past five years as access to liquidity became more selective in India's non-bank financial sector. The company had to curtail growth due to acute funding challenges, leading to its loan portfolio and profitability becoming half of pre-2019 levels.”

S&P said it expects the company's risk-adjusted capital ratio will grow to 22%-25% over the next two years, compared with about 19% as of March 31, 2023.

“The positive outlook on the long-term rating reflects a one-in-three chance that concentration in Ibhfl's funding profile could reduce over the next two years as the company scales up its co-lending partnerships with banks,” the agency said.

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