Piramal Capital and Housing Finance Receives Ba3 Rating from Moody's, Outlook Stable
Moody's assigns Ba3 rating to Piramal Capital and Housing Finance, citing its diversified portfolio mix and high capitalization, offset by relatively low profitability and legacy real estate exposures.
Piramal CapitalHousing FinanceMoodys RatingsCorporate FinanceReal EstateReal Estate NewsJun 28, 2024
The rating agency highlights Piramal Finance's high capitalization and increasingly diversified portfolio mix as key credit strengths. The company's loan book has diversified into retail and small-ticket corporate and real estate sectors, which now represent 79% of its consolidated assets under management. However, the legacy real estate exposures still pose a risk, representing about 21% of the AUM.
Moody's expects Piramal Finance's twin strategy of increasing retail and mid-market exposures while reducing the legacy lumpy real estate exposures to improve the granularization of the loan book and reduce the risk of volatility in its asset quality. The company's core profitability, excluding legacy real estate exposures, is moderate due to investments related to branch network expansion and human resources.
Piramal Finance relies fully on wholesale sources for its funding needs, with access to the domestic bond and bank loan market. While its on-balance sheet liquidity is modest, the company matches the maturities of its assets and liabilities, which helps manage liquidity.
To move up the ratings, Piramal Finance needs to meaningfully reduce its legacy real estate exposures and maintain stable asset quality of retail loans, while improving overall profitability with a return on average assets above 2.5%. Conversely, a deterioration in asset quality or capitalization, or worsened access to funding, could lead to a rating downgrade.
Information
Piramal Enterprises Limited (PEL) is a global business conglomerate with diversified interests in pharmaceuticals, financial services, and information management. Piramal Capital and Housing Finance Limited is a subsidiary of PEL, providing a range of financial services including housing finance, real estate finance, and corporate finance.
Moody's Ratings is a leading global credit rating agency, providing ratings and research on debt securities and issuers. Moody's ratings are widely followed by investors, financial institutions, and corporations, providing a benchmark for creditworthiness and risk assessment.
Frequently Asked Questions
What is the current rating assigned to Piramal Capital and Housing Finance by Moody's?
Ba3 with a stable outlook
What is the key credit strength of Piramal Finance, according to Moody's?
High capitalization and increasingly diversified portfolio mix
What is the percentage of legacy real estate exposures in Piramal Finance's AUM?
About 21%
What is the requirement for Piramal Finance to move up the ratings, according to Moody's?
Meaningfully reduce legacy real estate exposures, maintain stable asset quality of retail loans, and improve overall profitability
What could lead to a rating downgrade for Piramal Finance, according to Moody's?
Deterioration in asset quality or capitalization, worsened access to funding, or regulatory capital below 17%
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