IIHFL Unsecured NCD of Mar-2014-Is it Worth Investing?
IIHFL-India Infoline Housing Finance Limited NCD subscription opens on 12th March, 2014. The interest rates are 12% per annum. Currently, Manappuram Finance NCD, Muthoot Finance NCD issue are also available Considering several NCD’s are hitting the market this week, investors would have been confused where to invest money. Current IIFHL NCD is unsecured subordinate redeemable non convertible debentures. In this article, I would detail about whether we should invest in India Infoline Housing Finance (IIHFL) NCD of Mar-2014, what are its features and the risks involved in this NCD.
India Infoline Housing Finance (IIHFL) Unsecured NCD of Mar-2014
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 unsecured NCD.
Features of India Infoline Housing Finance (IIHFL) unsecured NCD of Mar-2014
- Start date: 12-March-2014
- Closure date: 24-March-2014
- NCD’s are available for 60 month period.
- Interest rate of 12% per annum.
- NCD’s are available in two options.
- Option-I-Interest would be paid monthly. Interest of 12% per annum would be paid. The effective annualized yield would be 12.68%
- Option-II-Cumulative- Interest would be at maturity after 60 months (5 years). Interest of 12% per annum would be paid. The effective annualized yield would be 12.25%
- 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.
- The issue size is Rs 100 Crores with an option to retain additional Rs 100 Crore aggregating to Rs 200 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 Millions
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 ICRA rated as “ICRA AA-/Stable” which indicates a high degree of safety for timely payment of financial obligations.
- Attractive interest rate of 12% for 60 months NCD. Yield works out to 12.68% for monthly interest and 12.25% for interest paid at maturity.
Why not to invest?
- These NCD’s are un-secured. Means in case of anything happening to the company, you would not get your money.
- Companies involved in financing business are little risky. Means the profits indicated now can reduce in the future as it may need to reduce interest rates charged to customers and this can lower the margins.
Conclusion: Earlier NCD’s issued by IIHFL were secured, hence I recommended for investment. India Infoline Housing Finance (IIHFL) current NCD’s are un-secured. There are secured NCD’s being offered by Manappuram Finance and Muthoot Finance now, hence you should look for such options from a safety point of view. If you want to invest in secured NCD and want to get higher returns, you can invest in Manappuram Finance NCD and avoid this issue.
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IIHFL Unsecured NCD of Mar-2014
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