11.52% India Infoline Housing Finance (IIFHL) Secured NCD-Dec-2013
India Infoline Housing Finance Limited NCD has hit the market yesterday. The interest rates are 11.52% per annum. Last month Shriram Transport finance have issued NCD which offered 11.50%. Considering so many NCD’s are coming to market every month, investors are getting confused where to invest their money. In this article, I would detail about whether we should invest in India Infoline Housing Finance (IIHFL) NCD, what are its features and the risks involved in this NCD.
India Infoline Housing Finance (IIHFL) secured NCD of Dec-2013
IIHFL is the housing finance arm of India Infoline Limited which is one of the largest diversified financial services companies in India. India Infoline Housing Finance (IIHFL) is issuing 60 months secured NCD’s. For secured NCD the assets are backed up for principal and interest. In case of windup of company, investors of NCD would still get their principal investment and interest. In IIHFL NCD bonds are secured against the home and mortgage receivables.
Features of India Infoline Housing Finance (IIHFL) secured NCD of Dec-2013
- Start date: 12-Dec-2013
- Closure date: 20-Dec-2013
- NCD’s are available for 60 month period.
- Interest rate is 11.52% per annum. Annualised yield works out to be 12.15%.
- NCD’s are offered for Category-I, Category-II and Category-III of investors. Retail investors fall under Category-III.
- Bond face value is Rs 1,000.
- Minimum investment is for 10 bonds means, you need to invest for a minimum of Rs 10,000. Beyond this you can invest in multiples of 1 bond.
- These NCD bonds would be listed in NSE and BSE. Hence these are liquid investments.
- NCD’s can be invested through Demat form or Physical form.
- Non-Resident Indians (NRI’s) cannot invest in these NCD’s.
- TDS would be deducted in case you take them in physical form.
- The issue size is Rs 250 Crores with an option to retain additional Rs 250 Crore aggregating to Rs 500 Crores.
How the company is doing in terms of Financials?
Below are the details profit after tax
- Year ended Mar-2009 – Rs 0.79 Millions
- Year ended Mar-2010 – Rs 19.54 Millions
- Year ended Mar-2011 – Rs 64.20 Millions
- Year ended Mar-2012 – Rs 35.94 Millions
- Year ended Mar-2013 – Rs 139.66 Millions
- 6 months ended Sep-2013 – Rs 117.81 Million
Why to invest?
- Company is making good profits, hence payment of interest would not be an issue.
- Crisil rated this NCD as “Crisil AA-/Stable” and Care rated as “Care AA-/Stable” which indicates high degree of safety for timely payment of financial obligations.
- These NCD’s are secured. Means in case of any unforeseen thing happening to the company, investors of NCD would still get the principal. Hence it is safe to invest in such secured NCD’s up to this limit.
- Attractive interest rate of 11.52% for 60 months NCD. The yield works out to be 12.15% per annum.
Why not to invest?
- Companies involved into financing business are little risky. Means the profits indicated now can reduce in future as it may need to reduce interest rates charged to customers and this can lower the margins.
- These would be listed on stock exchanges, however in case of emergency you may need to sell before maturity at discounted price and you may not get bond price.
- Parent company IIFL has recently issued NCD’s which offered 12% interest rates, hence IIHFL interest rates of 11.52% are low compared to parent company.
Download IIHFL NCD Dec 2013 issue prospectus
How would be post tax returns?
If you take NCD's in demat form, there would not be any TDS. However you are liable to pay income tax based on your individual income tax slab irrespective whether TDS is deducted or not. Below are post tax returns if you fall in various tax brackets
- 10% tax – Post tax returns – 10.33%
- 20% tax – Post tax returns – 9.15%
- 30% tax – Post tax returns – 7.96%
Conclusion: India Infoline Housing Finance (IIHFL) NCD’s are secured. You can safely invest in such safe investment options and get good returns. Since these are traded on stock exchanges, these are liquid investments too. Though there are a few drawbacks, I personally feel you can invest in such safe investment options.
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India Infoline Housing Finance (IIHFL) NCD – Dec 2013 issue