Rationale

 The ratings continue to derive comfort from the strategic importance of Capsave Finance Private Limited (CFPL) to Mizuho Leasing Company Limited (MHLS), an affiliate of Mizuho Financial Group, Inc. (MFG; rated A1 (Stable) by Moody’s Investors Service). ICRA notes that CFPL has benefited from its association with the Mizuho Group, following MHLS’s acquisition of a majority stake in Mizuho RA Leasing Private Limited {MRAL; name changed from Rent Alpha Private Limited in March 2025}, the holding company of CFPL, in June 2023. MHLS also infused additional equity of about Rs. 100 crore in MRAL in October 2023, which was down-streamed to CFPL. The company is currently comfortably capitalised, with a net worth of Rs. 952 crore and a managed gearing of 1.9 times as of December 2024. Going forward, ICRA expects MHLS to provide equity capital and enable CFPL to raise debt funds at competitive rates in a timely manner to support its growth plans. The company is also benefiting from its Mizuho association as its target borrower segment has expanded. MHLS is focused on expansion in emerging markets, including India; CFPL and MRAL are expected to be key entities for Mizuho’s business interests in India. ICRA notes that following the acquisition, Mizuho Bank has started partnering with MRAL and CFPL on the asset as well as liability side. The ratings take into consideration CFPL’s good asset quality performance, although the headline delinquencies weakened slightly with the 90+ days past due (dpd) increasing to 0.8% as of December 2024 and March 2024 from 0.1% as of March 2023. Consequently, the company has tightened its underwriting in the Working Capital Finance (WCF) segment and expects to restrict incremental slippages, going forward. Nevertheless, the asset quality of this segment would remain monitorable. CFPL’s profitability remains healthy, though declining {profit after tax (PAT)/average managed assets (AMA) of 3.1% in 9M FY2025 and FY2024 vis-à-vis 4.4% in FY2023} due to reducing interest margins with the shift to a better customer profile. Going forward, the company’s ability to stabilise the interest margins at the current levels would be crucial for maintaining healthy profitability on a sustained basis.