Akme Fintrade (India) Limited — Credit Ratings, 26-12-2024: Credit Rating- Revision

AFIL's credit rating has been reaffirmed, with an upgrade in ratings for its long-term bank facilities, reflecting a strong earnings profile, consistent asset growth, and robust capitalisation. The ratings for the long-term fund-based bank facilities are now IVR BBB+ with a stable outlook, up from IVR BBB. The total rated amount is ₹110 crore.

Key strengths include a healthy net interest income growth of approximately 17% year-on-year, reaching ₹41.37 crore, thanks to a solid on-book loan portfolio. The company’s Assets Under Management (AUM) rose by 14% year-on-year to ₹425.65 crore, driven by growth in the LAP/SME segment. The Net Interest Margin (NIM) also increased to 11.24%, while the Return on Total Assets (ROTA) improved to 4.58%.

While AFIL enjoys comfortable capital adequacy with a Capital Adequacy Ratio (CAR) of 70.38%, asset quality remains a concern, with Gross NPA at 3.13%. The high geographical concentration risk, primarily in Rajasthan, poses additional challenges, as does the intense competition within the non-banking financial sector.

Considering the firm’s financial health, management expertise, and strategic growth initiatives, including upcoming equity infusions from an IPO, a cautious approach is recommended for investors, positioning around an optimistic hold for potential future growth phases amid current risks.