Brickwork Ratings (BWR) has assigned the rating of BWR AA (Pronounced BWR Double A) with a stable outlook for the Perpetual Debt Issue of  `150 crore of Indiabulls Financial Services Ltd (IBFSL) and reaffirmed the outstanding rating for the Company’s  earlier Issue.

The rating “BWR AA” stands for an instrument that are considered to have high degree of safety regarding timely servicing of financial obligations. Such instruments carry very low credit risk.

 The rating, inter alia, factored increased focus towards low risk mortgages, growth in NII over last five years, lower dependence on short term borrowings, adequate capitalization, and significant amount of liquidity on the balance sheet. However, the rating is constrained by lack of seasoning of the loan portfolio, especially, given the high growth in assets under management at a CAGR of 67.2% over the last three years, exposure to commercial credit, which is more susceptible to economic downturns, the high interest rate scenario and competition from other housing finance companies and banks.

 Established in January 2000, Indiabulls Financial Services Ltd (IBFSL) is a systematically important non-deposit taking NBFC focused on secured asset classes, such as mortgages, commercial vehicle, and commercial credit loans. On April 27, 2012, IBFSL has decided to restructure its business by way of reverse merger with its wholly

owned subsidiary, Indiabulls Housing Finance Limited (IHFL) as a majority of the existing and incremental business of IBFSL relates to housing finance.  The scheme is subject to regulatory approval and will be effective from April 01, 2012.

As on March 2012, promoter and promoter group holds 37.03% stake in the company, FII’s hold 36%, individuals 18.4%, and corporates 5.38%, and FIs 3.47%.

 IBFSL reported 39% y-o-y increase in loan portfolio to ` 27,521 crore in FY12. IBFSLs net worth increased 8% y-o-y to ` 4,905 crore as of FY12. Overall capital position is strong with Total Capital of 18.90% and Tier 1 capital ratio of 18.20% as of FY12.  Leverage is comfortable at 5.02 times as of FY12.  The company’s gross non-performing assets improved to 0.79% at FY12 against 1.03%as on FY11. Net NPA declined to 0.33% at FY12 from 0.37% at FY11. Consolidated IBFSL reported 53% y-o-y increase in total income to ` 3,846.4 crore in FY12. The net interest income grew 18% y-o-y to ` 1,861.8 Cr in FY12. IBFSL has a spread of 3.9% in FY12.  Profit after tax increased 34% y-o-y to ` 1,006.5 Crore in FY12.