Tata Capital Housing Finance to raise up to Rs 3,500 crore via NCDs

Tata Capital Housing Finance Ltd (TCHFL), the mortgage lending arm of the Tata group, is planning to raise up to Rs 3,500 crore through non-convertible debentures (NCDs) to support business growth.

TCFHL, a subsidiary of Tata Capital Ltd, enjoys good financial flexibility and has access to funds at competitive rates of interest from various sources, said rating agency ICRA, which has assigned “AAA” rating to the proposed NCD offering.

The loan book of the company as on end of March was Rs 51,402 crore.

Typically, the banking regulator considers non-banking financial companies (NBFCs) with over Rs 50,000 crore loan book in the upper layer in the scale-based regulation framework. Such inclusion comes with enhanced regulatory oversight and listing of shares on exchanges.

TCFHL has diversified with a mix of NCDs, bank borrowings, and commercial paper, according to ICRA.

The company declined to comment on queries relating to its NCDs, business plans and prospects of being made part of RBI’s list of upper layer NBFCs.

According to its FY24 annual report, the company raised Rs 5,429 crore through secured NCDs via private placement. The aggregate debt outstanding as on March 31, 2024 was Rs 47,271 crore, out of which Rs 14,302 crore was payable within one year. Its debt-equity ratio was 7.27 per cent as on March 31, 2024.

TCHFL disbursed loans amounting to Rs 26,341 crore in FY24 as against Rs 17,338 crore in FY23. Its loan portfolio grew by 39 per cent year-on-year (Y-o-Y) to Rs 51,402 crore as on March 31, 2024 from Rs 36,917 crore.

The mortgage lender’s retail finance (RF) loan portfolio, comprising home loans and loans against property, grew to Rs 42,391 crore from Rs 30,580 crore a year ago. The company also provides construction finance (CF) to real estate developers in select Tier-I and Tier-II towns. The CF portfolio rose to Rs 9,011 crore at the end of FY24 from Rs 6,337 crore at the end of FY23. CF contributed significantly to TCHFL’s profitability by maintaining strong net interest margins and improving fee income on the back of higher volumes driven by a growing client base.