IIFL Samasta NCD Dec-2023 issue – Introduction
IIFL Samasta Finance Ltd (formerly Samasta Microfinance Ltd) has come up with a secured NCD issue that will open for subscription on December 4, 2023. IIFL Samasta Finance Limited is an NBFC and Microfinance Institution in India. These NCDs offer interest rates of up to 10.5% and are issued in 6 different series with a tenure of 24 to 60 months. Should you subscribe to the IIFL Samasta NCD of the December 2023 issue? What are the risk factors one should consider before investing in such high-risk NCDs?
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About IIFL Samasta Finance Limited
Company is a systematically important Non Banking Finance Company – micro Finance Institution in India
It offers innovative and affordable financial products to women who are enrolled as members andย organizedย as Jointย Liabilityย Groupย (JLG) fromย unbankedย sectionsย inย societyย including encompassing cultivators, agricultural laborers, vegetable and flower vendors, cloth traders, tailors, craftsmen, as well as household and industrial workers across rural, semi urban and urban areas in India.
Company is a subsidiary of IIFL Finance Limited. It offer wideย rangeย ofย loans tailoredย forย underservedย individualsย who lackย accessย toย traditionalย bankingย services and includes income generation loans, top-up loans, loan against property, micro enterprise loan, Lifestyle and Family Welfare loans such as dairy cattle loan,sanitationand hygiene, acquisition of daily-use items like cook stoves, water purifiers, solar lights, mobile phones, and other products enhancing their way of life.
Going beyond its financial services, Company also provides non-financial services, including life and hospicash insurance, along with financial counseling, ensuring comprehensive support for its valued customers. Its average cost of borrowing in Fiscal 2023 and six months period ending September30, 2023 wereย 9.98% and 10.49%, respectively.
IIFL Samasta NCD Dec-2023 โ Issue Details
Here are the details of IIFL Samasta NCD Tranche-I issue.
| Subscription opening Date | 04-Dec-23 |
| Subscription closure Date | 15-Dec-23 |
| Issuing Security Name | IIFL Samasta Finance Limited |
| Security Type | Secured, Rated, Listed, Redeemable, Non-Convertible Debentures |
| Issue Size (Base) | Rs 200 Crores |
| Issue Size (Option to retain over subscription) | Rs 800 Crores |
| Total issue size | Rs 1,000 Crores |
| Issue price | Rs 1,000 per bond |
| Face value | Rs 1,000 per bond |
| Series | Series I to VI |
| Minimum Lot size | 10 bonds and 1 bond there after |
| Tenure | 24, 36 and 60 Months |
| Interest Payment frequency | Monthly and Annual |
| Listing on | Within 6 working days on BSE |
| Lead Manager | JM Financials IIFL Securities Ltd Nuvama Wealth Trust Investment Advisors |
| Debenture Trustee/s | Beacon Trusteeship Ltd. |
IIFL Samasta NCD Dec-2023 โ Interest Rates
| Series | I | II | III | IV | V | VI |
|---|---|---|---|---|---|---|
| Frequency of Interest Payment | Monthly | Annual | Monthly | Annual | Monthly | Annual |
| Tenure (Months) | 24 | 24 | 36 | 36 | 60 | 60 |
| Coupon (% per Annum) | 9.21% | 9.60% | 9.57% | 10.00% | 10.03% | 10.50% |
| Effective Yield (% per Annum) | 9.59% | 9.59% | 9.99% | 9.99% | 10.49% | 10.49% |
| Amount on Maturity (In Rs.) | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 |
IIFL Samasta NCD Credit Ratings
These NCDs have been assigned the following credit ratings:
- CRISIL AA-/Positive Outlook by CRISIL Ratings
- Acuite AA Stable by Acuite Ratings and Research Limited.
These ratings indicate that instruments with this rating are considered to have a high degree of safety regarding the timely servicing of financial obligations and carry very low credit risk.
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IIFL Samasta Finance Limited – Profits
Its profits are:
- Year ended Mar-2022 โ 50.61 Crores
- Year ended Mar-2023 โ 128.17 Crores
IIFL Samasta NCD Dec-2023 โ Why to invest?
- These NCDs offer attractive interest rates of up to 10.5%, providing a yield of up to 10.5% per annum. Currently, banks and financial institutions are offering lower rates in comparison, making these NCDs an appealing investment option.
- The company has demonstrated good margin growth in the past. Investors are advised to consider NCDs from companies with growing margins.
- These NCDs are available in 6 different series, giving investors the flexibility to choose a series that best suits their preferences
IIFL Samasta NCD Dec-2023 โ Risk Factors
Here are the risk factors of investing in these bonds.
- A downgrade of its credit ratings may increase borrowing costs, adversely affecting net interest margins and overall results of operations.
- An increase in the levels of non-performing assets (NPA) on its loan portfolio could have adverse effects on its business.
- Certain conditions and restrictions in its financing arrangements could limit its ability to conduct business and operations.
- Volatility in interest rates could have a material adverse effect on net interest income.
- Investors are advised to refer to the IIFL Samasta NCD RHP prospectus for a complete understanding of the risk factors.”
- Investors are advised to refer to the IIFL Samasta NCD RHP prospectus for a complete understanding of the risk factors.
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IIFL Samasta NCD Dec-2023 โ Should you invest or Avoid?
- IIFL Samasta NCD Tranche-I offers high-interest rates up to 10.5%, surpassing current rates offered by banks and financial institutions. These secured NCDs provide investor preference in the event of a financial crisis or company shutdown, ensuring prioritized payment of interest and capital repayment. Rated as AA- by CRISIL and Acuite Ratings, these NCDs hold a favorable rating.
- On the downside, it is essential to consider the historical issues of NBFCs delaying interest payments and capital repayment, with occasional cases of defaults. Additionally, credit ratings are subject to change. Investors are advised to thoroughly review all risk factors outlined in the RHP.
High-risk investors who understand these factors may find these NCDs suitable for investment.
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