Upcoming 180% right share of Hathway Finance receives Grade 5 rating from Care Ratings indicating poor fundamentals
Mon, Jun 25, 2018 2:55 AM on Credit Rating, Dividend, Bonus & Rights, Latest, Stock Market,
Care Ratings Nepal has assigned IPO Grade 5 ratings to the upcoming right shares issue of Hathway Finance Company Limited (HATH) indicating poor fundamentals. HATH proposes 180% rights share issue of 54 lakh number of equity shares of face value of Rs.100 each at par aggregating Rs.54 crore.
The grading assigned to HATH is constrained by its high Gross Non-performing loans (GNPL) ratio with slow recovery from GNPLs & Non-Banking Assets (NBA), low level of deposits and high depositor concentration, low level of credit portfolio, although the same is growing post HATH coming out of the “Problematic Institution‟ status.
HATH operating performance was volatile over the period. HATH achieved Rs.11.90 Mn operating profit in FY16 as against Rs (82.21) Mn operating loss in FY15 which was mainly due to increase in interest income on back of recovery of interest on GNPL and decrease in interest expenses by 43% due to decline in deposits.
HATH operating performance was volatile over the period. HATH achieved Rs.11.90 Mn operating profit in FY16 as against Rs (82.21) Mn operating loss in FY15 which was mainly due to increase in interest income on back of recovery of interest on GNPL and decrease in interest expenses by 43% due to decline in deposits.
The grading, however, derives support from reputed & experienced new promoter group and management team, high Capital Adequacy Ratio (CAR) post infusion of capital and high level of CASA. HATH CAR was 26.62% at the end of FY17 as against the minimum regulatory requirement of 11% and 5.5% respectively for "C‟ class financial institution.
Hathway Finance Company Limited (formerly known as Arun Finance Limited) is a National Level class “C” Finance Company which was incorporated on February 24, 1995. During FY17 (A), HATHearned PAT of Rs.12 million with total operating income of Rs. 11 million. Further, during 9MFY18 (UA), HATH earned profit of Rs.18 Million with total operating income of Rs. 52 million.
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