10.5% IIFL Samasta NCD Dec-2023 issue details

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 and  organized  as Joint  Liability  Group  (JLG) from  unbanked  sections  in  society  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 wide  range  of  loans tailored  for  underserved  individuals  who lack  access  to  traditional  banking  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 were  9.98% and 10.49%, respectively.

IIFL Samasta NCD Dec-2023 – 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 – Interest Rates

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 – 50.61 Crores
  • Year ended Mar-2023 – 128.17 Crores

IIFL Samasta NCD Dec-2023 – 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 – 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 – 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.

Suresh KP

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