CRISIL NBFC Report The operating environment for non-banking financial companies (NBFCs) seems to be improving. With the economy on the mend, loan disbursements have picked up in most segments, funding costs are coming down, and several banks are facing capital constraints, giving these lenders a foot in the door. However, competition is heating up across the board as new players enter. Will the pace of growth sustain? Will it be a secular ride, or will the earnings growth trajectory be better for some segments? This report delves deep into the fast-changing NBFC landscape. It contains CRISIL Research s perspective on the growth prospects, competitive scenario and attractiveness in 10 segments where NBFCs operate. The coverage includes: Outlook on growth and risk by segment Segment-wise profitability outlook, considering business growth, resource profile & asset quality Detailed assessment of competitive positioning and market share of NBFCs in each segment Perspective on regulatory direction in each segment Profiles of 125 NBFCs, detailing key operational and financial parameters Product segments covered 1. Infrastructure finance 2. Housing finance 3. Low-cost housing finance 4. Loan against property Auto finance (including used cars & CVs and new 5. 6. Construction equipment finance tractor finance) 7. Wholesale finance 8. SME loan 9. Gold loan 10. Microfinance Coverage Overview For each of the segments covered Relative attractiveness of NBFC segments based on Overall growth in the industry growth and profitability outlook Competitive positioning of NBFCs across key segments Market share of NBFCs vs banks Structure and classification of NBFCs Growth outlook for NBFCs Importance of NBFCs in India of NBFCs review & outlook Regulatory environment for NBFCs review & outlook Key growth drivers and challenges Player profiles
Detailed Table of Contents Infrastructure Financing Outstanding portfolio growth and market dynamics Review of growth in overall infrastructure financing market Growth in infrastructure projects sanctioned by financial institutions Segment wise share of investments Market share of NBFCs vs. Banks including outlook Infrastructure finance portfolio mix of banks and NBFCs Infrastructure finance portfolio mix for NBFC (excluding PFC and REC) Growth outlook for NBFCs Player wise market share of NBFCs Borrowing profile for overall NBFCs and for NBFCs excluding PFC and REC - for overall NBFCs and for NBFCs excluding PFC and REC Capital adequacy Past trend in Gross NPAs and restructured assets Outlook on GNPAs Industry Information Underlying asset dynamics Regulatory framework Key growth drivers and risks in the finance market Housing finance Outstanding portfolio growth and market dynamics Review of housing finance market growth Brief analysis on real estate markets in top 10 cities Growth outlook for HFCs
Analysis of large HFCs vis-à-vis small and medium sized HFCs Market share of HFCs vs. Banks including outlook Key competencies which will help HFCs sustain business growth despite competition from banks Player wise market share of HFCs Breakup of HFC portfolio (Retail housing loans, Non-Retail) Borrowing profile of HFCs of HFCs separate trend for large HFCs vis-à-vis small and medium sized HFCs - Retail housing loans and non-retail segment Capital adequacy Past trend in Gross NPAs Outlook on GNPAs Industry Information Underlying asset dynamics and demand drivers Regulatory framework Key growth drivers and risks in the finance market Low cost housing finance (Ticket size of <Rs 1 million) Outstanding portfolio growth and market dynamics Segmentation of housing finance market based on ticket size Mapping of housing finance market based on ticket size and risk assessment Region wise distribution of housing finance market Review of low cost housing market growth Outlook for low cost housing finance focused HFC growth Key drivers for growth Business model of low cost housing players Customer risk assessment in low-cost housing finance Key risks
Borrowing mix of housing finance players based on size of housing finance players based on ticket size Loan Against property Outstanding portfolio growth and market dynamics Review of LAP market growth Outlook for LAP market growth Key drivers for growth Trend in share of tier II cities Market share of Non-banks vs. Banks including outlook Business sourcing mix for Non-Banks Business models for Non-banks, Private sector banks and public sector banks Profile of the Non-bank customers Collateral mix for Non-banks Key market parameters (Interest rates, loan to vale, average ticket size, tenure) Key risks involved while providing LAP Past trend in Gross NPAs Outlook on GNPAs Auto Finance Outstanding portfolio growth and market dynamics - overall Auto finance Underlying asset growth outlook Growth outlook for NBFCs (including Segment wise growth expectations for new vehicle sales) Market share of NBFCs vs. Banks including outlook
Player wise market share of NBFCs Breakup of NBFC portfolio Indicative yields and GNPAs across segments Segment wise key parameters like Penetration, LTV, Tenure, ATS overall Auto finance Borrowing profile Capital adequacy overall Auto finance Past trend in Gross NPAs Outlook on GNPAs Tractor finance Current market size and past growth Share in disbursements for NBFCs, private sector banks and others Key competencies which will help NBFCs sustain business growth despite competition from banks Disbursement growth outlook Key market parameters (Loan to value, finance penetration) Used CV finance market Current market size and past growth Disbursement growth outlook LCV and MHCV separate calls Share in disbursements for NBFCs vs Banks Key market parameters (Finance penetration, risk profile, interest rate, loan to value ratio) Key success factors for used CV finance business Used car finance market Current market size and past growth Disbursement growth outlook Share in disbursements for NBFCs vs Banks
Key parameters on which players compete Industry Information Overall Auto finance Underlying asset dynamics and demand drivers Evolution Regulatory framework Key growth drivers and challenges in the finance market Construction equipment loans Disbursement growth and market dynamics Growth in disbursements Review and outlook Organised vs unorganized segment Finance penetration Market share of NBFCs vs Banks Growth outlook for NBFC Assets under management Player wise market share of NBFCs Breakup of NBFC portfolio (new vs used; Contractor vs. Hirer/Rental) Borrowing profile Industry Information Underlying asset dynamics and demand drivers Regulatory framework Key success factors and challenges in the finance market
Wholesale finance Outstanding growth and market dynamics Current market size and past growth Market share of NBFCs vs. Banks including outlook Growth outlook for NBFCs Key competencies which will help NBFCs sustain business growth despite competition from banks SME loans Outstanding growth and market dynamics Current market size and past growth Market share of NBFCs vs. Banks including outlook Growth outlook for NBFCs Channels for sourcing business Key competencies which will help NBFCs sustain business growth despite competition from banks Customer profile (Manufacturing, Services, Trading) Gold Loan Outstanding portfolio growth and market dynamics Review of the gold loan market Growth outlook for NBFCs Market share of NBFCs vs. Banks including outlook Key competencies which will help NBFCs sustain business growth despite competition from banks Region wise breakup of NBFC portfolio Player wise market share of NBFCs
Borrowing profile, securitisation trend Capital adequacy Past trend in Gross NPAs Outlook on GNPAs Sensitivity of gold prices and LTV on probability of default Industry Information Underlying asset dynamics and demand drivers Features of gold loans (Interest rate, tenure, LTV, ATS), comparison with personal Loan Regulatory framework Key growth drivers and risks in the finance market Micro finance Outstanding portfolio growth and market dynamics Review of AUM growth for MFIs Growth in ticket size and number of clients Growth outlook for MFIs separately for players with SFB license Market share of MFIs vs. Banks including outlook Key trend of MFIs and Bank portfolio (Average ticket size, GNPAs) Impact of small bank licenses on the MFIs Player wise market share of MFIs State wise split of MFI AUM and client base State wise portfolio growth of MFIs Urban rural client mix of MFIs Proportion of loans given for income generation vs consumption Borrowing profile Trend in securitization outlook for players with SFB license and without SFB license
Difference in profitability of small and large players Past trend in Gross NPAs Outlook on GNPAs Industry Information Evolution of the industry Business models Regulatory framework Key growth drivers and risks in the finance market Player Profile for All Segments Covered IFCI Ltd IL&FS Financial Services Ltd India Infrastructure Finance Company Ltd L&T Infrastructure Finance Ltd Can Fin Homes Ltd Dewan Housing Finance Corporation Limited GIC Housing Finance Limited Housing Development Finance Corporation Ltd ICICI Home Finance Company Limited Indiabulls Housing Finance Ltd (Consolidated) Arman Financial Services Limited AU Financiers (India) Ltd Bansal Credits Limited Berar Finance Limited BMW India Financial Services Private Limited Bussan Auto Finance India Private Limited Ceejay Finance Limited Cholamandalam Investment & Finance Co Ltd Daimler Financial Services India Private Limited Equitas Finance Pvt Ltd Family Credit Limited Hero Fincorp Ltd Infrastructure Financing Power Finance Corporation Ltd Rural Electrification Corporation Ltd SREI Infrastructure Finance Ltd Housing finance L&T Housing Finance Ltd LIC Housing Finance Limited PNB Housing Finance Limited Reliance Home Finance Repco Home Finance Ltd Tata Capital Housing Finance Ltd Auto Loans Kotak Mahindra Prime Ltd L&T Finance Ltd Magma Fincorp Ltd Mahindra & Mahindra Financial Services Ltd Manba Finance Limited Muthoot Capital Services Ltd Sakthi Finance Limited Shriram Transport Finance Co Ltd Sundaram Finance Ltd Tata Motors Finance Ltd Toyota Financial Services India Ltd TVS Credit Services Limited SREI BNP Paribas Construction equipment loans
Kosamattam Finance Ltd Manappuram Finance Ltd Muthoot Finance Ltd Gold Loan Muthoot Fincorp Ltd Muthoottu Mini Financiers Limited Annapurna Microfinance Pvt Ltd Arohan Financial Services Pvt Ltd Asirvad Microfinance Pvt Ltd Cashpor Micro Credit Equitas Microfinance India Pvt Ltd ESAF Microfinance Fusion Microfinance Pvt Ltd Future Financial Services Ltd Grama Vidiyal Microfinance Pvt Ltd Grameen Koota Financial Services Pvt Ltd Janalakshmi Financial Services Micro finance Madura Micro Finance Ltd Namra Finance Limited S V Creditline Pvt Ltd Satin Creditcare Network Ltd SKS Microfinance Ltd SMILE Microfinance Ltd Sonata Finance Pvt Ltd Suryoday Microfinance Ltd Ujjivan Financial Services Pvt Ltd Utkarsh Micro Finance Pvt Ltd Aadhar Housing Finance Limited Aditya Birla Housing Finance Limited Akme Star Housing Finance Limited Aptus Value Housing Finance India Limited Aspire Home Finance Corporation Limited Au Housing Finance Limited Bajaj Housing Finance Limited Capital First Home Finance Private Limited Cent Bank Home Finance Ltd DHFL Vysya Housing Finance Limited Edelweiss Housing Finance Limited Equitas Housing Finance Private Limited Fullerton India Home Finance Company Limited Gruh Finance Ltd HDB Financial Services Ltd Ind Bank Housing Limited India Home Loans Limited Low Cost Housing India Infoline Housing Finance Limited Magma Housing Finance Mahindra Rural Housing Finance Ltd Manappuram Home Finance Private Limited Manipal Housing Finance Syndicate Limited MAS Rural Housing and Mortgage Finance Limited Micro Housing Finance Corporation Limited Muthoot Housing Finance Company Limited New Habitat Housing Finance and Development Limited Religare Housing Development Finance Corporation Limited Sahara Housingfina Corpn Ltd Shriram Housing Finance Ltd Shubham Housing Development Finance Company Private Limited SRG Housing Finance Ltd Sundaram BNP Paribas Home Finance Ltd Swagat Housing Finance Company Limited Aditya Birla Finance Limited Altico Capital India Private Limited Axis Finance Limited IndoStar Capital Finance Limited KKR India Financial Services Private Limited Wholesale Finance L&T Finance (Holdings) - Wholesale Financing Piramal Finance STCI Finance Limited Tata Capital Financial Services
Bajaj Finance Ltd Capital First Ltd Capital Trust Limited Capri Global Capital Ltd Edelweiss Financial Services Ltd Essel Finance Business Loans Ltd Fullerton India Credit Company Ltd IFMR Capital Finance Private Limited Diversified business India Infoline Ltd Intec Capital Limited MAS Financial Services Ltd Reliance Commercial Finance Religare Finvest Ltd Shriram City Union Finance Ltd Vistaar Financial Services Private Limited
About CRISIL Limited CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations. CRISIL is majority owned by S&P Global Inc., a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide. About CRISIL Research CRISIL Research is India's largest independent integrated research house. We provide insights, opinion and analysis on the Indian economy, industry, capital markets and companies. We also conduct training programs to financial sector professionals on a wide array of technical issues. We are India's most credible provider of economy and industry research. Our industry research covers 86 sectors and is known for its rich insights and perspectives. Our analysis is supported by inputs from our network of more than 5,000 primary sources, including industry experts, industry associations and trade channels. We play a key role in India's fixed income markets. We are the largest provider of valuation of fixed income securities to the mutual fund, insurance and banking industries in the country. We are also the sole provider of debt and hybrid indices to India's mutual fund and life insurance industries. We pioneered independent equity research in India, and are today the country's largest independent equity research house. Our defining trait is the ability to convert information and data into expert judgements and forecasts with complete objectivity. We leverage our deep understanding of the macroeconomy and our extensive sector coverage to provide unique insights on micro-macro and cross-sectoral linkages. Our talent pool comprises economists, sector experts, company analysts and information management specialists. CRISIL Privacy CRISIL respects your privacy. We use your contact information, such as your name, address, and email id, to fulfil your request and service your account and to provide you with additional information from CRISIL and other parts of S&P Global Inc. and its subsidiaries (collectively, the Company ) you may find of interest. For further information, or to let us know your preferences with respect to receiving marketing materials, please visit www.crisil.com/privacy. You can view the Company s Customer Privacy at https://www.spglobal.com/privacy Last updated: April 2016 Disclaimer CRISIL Research, a division of CRISIL Limited (CRISIL) has taken due care and caution in preparing this Report based on the information obtained by CRISIL from sources which it considers reliable (Data). However, CRISIL does not guarantee the accuracy, adequacy or completeness of the Data / Report and is not responsible for any errors or omissions or for the results obtained from the use of Data / Report. This Report is not a recommendation to invest / disinvest in any company / entity covered in the Report and no part of this report should be construed as an investment advice. CRISIL especially states that it has no financial liability whatsoever to the subscribers/ users/ transmitters/ distributors of this Report. CRISIL Research operates independently of, and does not have access to information obtained by CRISIL s Ratings Division / CRISIL Risk and Infrastructure Solutions Limited (CRIS), which may, in their regular operations, obtain information of a confidential nature. The views expressed in this Report are that of CRISIL Research and not of CRISIL s Ratings Division / CRIS. No part of this Report may be published / reproduced in any form without CRISIL s prior written approval. Argentina China Hong Kong India Poland Singapore UK USA CRISIL Limited: CRISIL House, Central Avenue, Hiranandani Business Park, Powai, Mumbai 400076. India Phone: + 91 22 3342 3000 Fax: + 91 22 3342 3001 www.crisil.com