“While the A1+ rating takes a note of RCL’s moderate asset liability management profile on account of its higher reliance on short term funds to build consumer finance business, it draws comfort from its unrealised gains on its investment portfolio and higher financial flexibility,” ICRA said.
AI+ rating indicates the highest-credit quality rating. Instruments rated in this category carry the lowest credit risk in short term.
The rating factors in the RCL’s association with Reliance Dhirubhai Ambani (ADA) group, strong capitalisation levels amongst Indian non-banking finance companies, and its moderate gearing, it added.
It also takes into account the group’s strong presence in various businesses in financial service domain like asset management, life insurance, general insurance, equity broking, distribution of financial products and proprietary investments.
The rating agency added that RCL’s short term liquidity profile remains moderate as it has been resorting to the short term borrowing to fund its long term consumer finance business while also supporting other group companies especially life insurance business.
It further said that going forward, RCL’s rating would be sensitive to its ability to maintain comfortable asset quality of the consumer finance business, and to manage its liquidity profile while supporting the group companies besides scaling up the consumer finance business.
Courtesy: economictimes.indiatimes.com
